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ETI AlphaDirect Weekly Watch , 6-13-2016


The alphaDIRECT Insight

E&ET Index. This week ending 6/10/2016, the ETI Alpha Direct Index underperformed the broader market and was down 0.7% week-over-week (vs. the S&P 500 Index decrease of 0.15%, Russell 2000 decrease of 0.02% and the Nasdaq Composite decrease of 0.97%). This compares to an increase of 0.4% week-over week for the Industrial Technologies index. The E&ET Index is +9.7% YTD vs. +2.6% YTD for the S&P 500, +2.5% for the Russell 2000 and –1.3% for the NASDAQ Composite.

Valuation. Based on the forward 12-month consensus estimates, the current Priceto-Earnings (P/E) ratio of the E&ET Index of 18.3x, vs. S&P 500 of 16.9x. Since 2000 the historical P/E has average 21.1 x NTM earnings estimates, with a standard deviation of 5.1x, generating a range of 15.9x to 26.2x. This compares to a historical average P/E of 16.3x for the S&P 500.

Energy department invests more than $10 million in efficient lighting research and development. Building on the new commitments to the Global Lighting Challenge announced last week during the Clean Energy Ministerial, the Energy Department is announcing funding for nine research and development projects that will support solid-state lighting (SSL) core technology research, product development, and manufacturing research and development. The projects will help accelerate the development of high-quality light-emitting diode (LED) and organic light-emitting diode (OLED) lighting products that can significantly reduce energy costs for American families and businesses by using less electricity than products currently in use and ensure that the U.S. remains globally competitive.

Canada, Mexico and the United States Show Progress on North American Energy CollaborationIn support of the objectives of the 7th Clean Energy Ministerial (CEM) and inaugural Mission Innovation Ministerial in San Francisco, the Honourable Jim Carr, Canada’s Minister of Natural Resources, Pedro Joaquín Coldwell, Mexico’s Secretary of Energy, and Dr. Ernest Moniz, United States’ Secretary of Energy, reviewed their cooperative efforts underway to foster sustainable energy development, address climate change, and encourage economic growth.

Q1’16 Earnings Season Recap. Overall, expectations into earnings were fairly high in the Energy, Environmental & Industrial Technologies industry and even solid beats resulted in modest stock price appreciation (2-4%) post-earnings.

Consensus estimates change. For the week ending 6/10/2016, there were 5 increases and 3 declines in 2016 revenue estimates, 5 increases and 5 declines in 2016 EPS consensus estimates. This compares to last week’s 5 increases and 3 declines in 2016 revenue estimates, and 5 increases and 5 declines in 2016 EPS consensus estimates.