Rhythmic Reasoning_Full Report_Final_EN - Flipbook - Page 51
THE DRUMMER'S EAR | RHYTHMIC REASONING
EQUITIES OVERVIEW
NORTH AMERICAN EQUITIES CONTINUED TO RECOVER DURING THE THIRD QUARTER
Equity markets rallied in 3Q as the expectations
for loosening monetary policy were reinforced
Earnings expectations in Canada saw a slight
improvement, while U.S. still expected to slow
Total return decomposition
50%
U.S.
40%
CA
30%
Int
20%
YoY EPS growth
10%
LatAm
-5%
0%
EPS
5%
10%
Multiple Δ
Dividends
0%
15%
U.S.
CA
Last 12 months
Int
LatAm
Next 12 months
INDEX COMPOSITION SUGGESTS THE U.S. MARKET IS OF HIGHER QUALITY AND MORE DIVERSIFIED THAN PEERS
Cyclical sectors account for the majority of
earnings in markets outside the U.S.
Adjusting for index earnings composition shows
U.S. equity valuations are in line with Canada
23
33%
61%
77%
81%
23%
19%
LatAm
CA
17
17
67%
39%
U.S.
Int
Cyclicals (financials, energy, industrials, materials)
24
17
U.S.
CA
P/E
All others
16
11
Int
LatAm
Adj. P/E
OPERATIONAL & CAPITAL EFFICIENCY GAUGED BY RETURN ON INVESTED CAPITAL, RETURN ON EQUITY, AND LEVERAGE
ROE
ROIC (Median)
Net Debt/EBITDA*
1.4x
1.3x
18.3%
11.2%
8.2%
U.S.
CA
1.0x
9.0%
Int
11.5%
U.S.
CA
11.7%
Int
Sources: Bloomberg Finance LP, Scotia Wealth Management | * - EBITDA = earnings before interest, taxes, depreciation, and amortization.
U.S.
CA
Int
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