Euronext Seeks to Court Defense Company IPOs to Tap Into Military Boom
European stock exchange operator Euronext NV is seeking to court defense company listings and eager investors to tap the surge in military spending.
The company has invited potential investors for the Euronext Aerospace and Defence Funding Days on July 7-8 to meet virtually with potential firms who may have plans for an initial public offering, according to an invitation seen by Bloomberg News. After the virtual meetings, Euronext will seek feedback on each company to gauge the 'IPO-readiness' of the firms.
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36 minutes ago
- Yahoo
Companies record fourth-quarter profits that are half their earnings in the interim quarters
This story was originally published on To receive daily news and insights, subscribe to our free daily newsletter. CFOs who like to watch the stock markets might be interested to know that investors and analysts consistently miss a profit-making opportunity related to companies' fourth-quarter earnings. During 35 years from 1989 through 2023, U.S. public companies reported fiscal fourth-quarter profits that were an average of 49.6% lower than the average of the three interim quarters, according to a new, so-far unpublished paper. The effect was shown to be strongly present in every year tracked in the study, which was performed by Oliver Binz and Martin Kapons, assistant professors at European universities ESMT Berlin and INSEAD, respectively. Virtually all of the Q4 earnings falloff was attributed to inaccurately low accrual expense estimates for the interim quarters, particularly for the cost of goods sold and sales, general and administrative expenses. That caused a shift in such expenses to the fourth quarter. Tentatively titled 'The Fourth-Quarter Earnings Effect,' the study normalized earnings across the spectrum of company sizes by using a standard method of computing return on assets — income before extraordinary items, divided by total assets — as the measurement of earnings. The study included all U.S. companies with publicly traded equity or debt. Despite the regularity of lower Q4 earnings, analysts repeatedly reacted negatively to the annual earnings announcements that include Q4 results, and investors followed, thus ignoring a profit opportunity hiding in plain sight. Additionally, the research found, negative reactions to 4Q announcements typically washed out of the market within two months, while negative reactions to interim-quarter announcements generally didn't reverse at all. 'This pattern is so clear that it would be relatively easy to come up with a trading strategy that would generate abnormal returns,' Binz said. Specifically, a hedging portfolio created by buying the stocks of companies reporting Q4 earnings that negatively surprised analysts, and selling the stocks of companies that did so for interim-quarter earnings, would have earned an alpha averaging 0.6% per month, or 7.2% annually, during the study period. But if the market pattern that creates this profit opportunity is clear, why have analysts and investors not leveraged it more? It's particularly curious behavior because, as Binz told research documented decades ago that analysts' Q4 forecasts were systematically optimistic. To be sure, market reactions to the Q4 earnings misses are less negative than for earnings surprises in the other quarters, indicating that analysts and investors 'may get it to a certain degree,' said Binz. 'But they don't get it fully.' Binz said that to his knowledge, the paper would be the first to document the fourth-quarter earnings effect, although some prior research hinted at it, such as one study concluding that loss-making firms tend to have high special charges in the fourth quarter. Consider, though, that (1) U.S. public companies are not required to break out Q4 results separately from the full-year results presented in annual reports; (2) full-fledged audits are not required for the interim quarters; and (3) most profit-forecasting frameworks rely on annual data, while quarterly data is relatively little-used. Consequently, Binz suggested, 'there might be more pressure from auditors, investors, and other stakeholders to get the numbers right for the full fiscal year than there is for the interim quarters.' While Q4 data has always been easily calculable, 'it's not like it's straight in sight.' In fact, the SEC has come under fire for continuing to mandate quarterly reporting. Warren Buffett, for one, is not a fan. CFOs, for their part, don't tend to be much concerned with short-term fluctuations in their company's stock price. And they likely don't care enough about the annual dips in Q4 income to warrant investment in making sensible accrual estimates in the interim quarters, since the dips are caused merely by a shift of accrual expenses to the fourth quarter and don't impact annual results. But is that lack of attention wise? 'From prior research, we have some indication that managers actually rely on these accrual estimates when making decisions,' Binz said. 'So if the financial reporting is systematically off, they might make worse decisions. That is speculation, but it's the next natural question to ask.' Binz and Kapons are currently seeking input to fine-tune the paper in preparation for shopping it to investment journals. Sign in to access your portfolio
Miami Herald
38 minutes ago
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How Mazda Plans To Outsmart America's Harsh Tariffs
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43 minutes ago
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Crude Oil Settles Higher on US-China Trade Optimism
August WTI crude oil (CLQ25) Friday closed up +0.28 (+0.43%), and August RBOB gasoline (RBQ25) closed down -1.04 (-0.50%). Crude oil and gasoline prices settled mixed on Friday. Crude found support on signs of easing trade tensions as the US moves closer to trade deals with China and other trading partners. Also, uncertainty over Iran gave crude prices a boost after US Energy Secretary Wright said that sanctions against Iran will remain in place for now. In addition, Friday's rally in the S&P 500 to a new record high shows confidence in the economic outlook, which is supportive of energy demand and crude prices. Gains in crude oil were limited, and gasoline prices fell due to a stronger dollar. Also, the crude crack spread Friday slid to a 1-1/2 week low, discouraging refiners from buying crude and refining it into gasoline and distillates. Crude Oil Prices Climb on Positive Trade News Nat-Gas Prices Surge in Anticipation of Hot US Weather Crude Oil Settles Higher on US-China Trade Optimism Tired of missing midday reversals? The FREE Barchart Brief newsletter keeps you in the know. Sign up now! Crude prices rose Friday after US Commerce Secretary Lutnick said that the US and China had finalized a trade understanding reached last month in Geneva. Also, Commerce Secretary Lutnick said the White House has imminent plans to reach agreements with a set of 10 major trading partners ahead of a July 9 deadline for reciprocal tariffs. Crude oil prices have underlying support from US and European intelligence reports suggesting that Iran may still have most of its stockpile of 60% enriched uranium even after the Israeli and US bombing runs, which means that sanctions will likely remain in place until Iran agrees to nuclear inspections. On Friday, President Trump said he considered easing sanctions on Iran after a ceasefire, but would instead keep sanctions in place after Iran's Supreme Leader, Ali Khamenei, claimed victory in the war with Israel. Concern about a global oil glut is negative for crude prices. On Wednesday, Russia stated that it is open to another output hike for OPEC+ crude production in August, when the group meets on July 6. On May 31, OPEC+ agreed to a 411,000 bpd crude production hike for July after raising output by the same amount for June. Saudi Arabia has signaled that additional similar-sized increases in crude output could follow, which is viewed as a strategy to reduce oil prices and punish overproducing OPEC+ members, such as Kazakhstan and Iraq. OPEC+ is boosting output to reverse the 2-year-long production cut, gradually restoring a total of 2.2 million bpd of production. OPEC+ had previously planned to restore production between January and late 2025, but now that production cut won't be fully restored until September 2026. OPEC May crude production rose +200,000 bpd to 27.54 million bpd. Gasoline prices have support from the American Automobile Association (AAA) projection that a record 61.6 million people will travel by car this Fourth of July holiday (June 28 to July 6), up +2.2% from last year and a sign of stronger gasoline demand. Oil prices continue to be undercut by tariff concerns, as President Trump recently stated that he intends to send letters to dozens of US trading partners within one to two weeks, setting unilateral tariffs ahead of the July 9 deadline that followed his 90-day pause. A decline in crude oil held worldwide on tankers is bullish for oil prices. Vortexa reported Monday that crude oil stored on tankers that have been stationary for at least seven days fell by -13% w/w to 79.66 million bbl in the week ended June 20. Wednesday's EIA report showed that (1) US crude oil inventories as of June 20 were -10.9% below the seasonal 5-year average, (2) gasoline inventories were -2.8% below the seasonal 5-year average, and (3) distillate inventories were -20.3% below the 5-year seasonal average. US crude oil production in the week ending June 20 was unchanged w/w at 13.435 million bpd, modestly below the record high of 13.631 million bpd from the week of December 6. Baker Hughes reported last Friday that active US oil rigs in the week ending June 27 fell by -6 to a 3-3/4 year low of 432 rigs. Over the past 2-1/2 years, the number of US oil rigs has fallen from the 5-1/4 year high of 627 rigs posted in December 2022. On the date of publication, Rich Asplund did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. This article was originally published on Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
