The much anticipated recovery in JSE earnings off a global financial crisis depressed base is now well under way. The results reported by Anglo and BHP Billiton (with a combined ALSI weight of about 24.7%) have contributed meaningfully to the reported growth rates. As we show below, ALSI earnings per share are now 36% higher than a year ago while in real CPI deflated terms the growth is 32% and in US dollars an even more impressive 46% higher than February 2010.
For the full article including graphs and figures, read today’s Daily View: Daily View, 22 Feb 2011: Earnings – Growth is accelerating
As we show below JSE earnings per share in US dollars are back to peak 2007 levels while in rands and real rands, earnings pr share have still some way to go to surpass previous peak earnings.
In the figure below we compare real earnings to 10 year and 20 year rolling earnings. As may be seen, real earnings are now equal to the 20 year rolling estimate and still below the 10 year rolling level. We prefer the 10 year rolling measure as a measure of cyclically adjusted or normalised earnings.
In the figure below we compare the respective JSE price earnings (PE) multiples. As may be seen trailing and 10 year multiples are in line – though with 10 year rolling earnings still below actual earnings and earnings growth. This is very likely to grow rapidly from current levels, and may be regarded as a bullish indicator.