The Lessons Learned From Corporate Earnings Season

The video tutorial discusses corporate earnings, focusing on CapEx and R&D spending trends since 2006. It highlights the misconception that companies are not reinvesting, showing that R&D has increased despite flat CapEx. The tutorial also examines growth in the consumer discretionary sector, noting its resilience and potential for earnings growth. Finally, it analyzes PE ratios and sector valuations, emphasizing the consumer discretionary sector's undervaluation compared to historical averages.

What has been the trend in capital expenditures (CapEx) since 2014?

• CapEx has remained relatively flat.

• CapEx has significantly increased.

• CapEx has been volatile.

• CapEx has decreased sharply.

How does increased R&D spending affect a company's profit margins?

• It stabilizes profit margins.

• It decreases profit margins.

• It has no effect on profit margins.

• It increases profit margins.

What is a common misconception about corporate reinvestment?

• Companies are heavily reinvesting in CapEx.

• Companies are only investing in R&D.

• Companies are not reinvesting in themselves.

• Companies are reducing both CapEx and R&D.

Which sector is highlighted for its growth potential despite overall muted earnings growth?

• Utilities

• Consumer Discretionary

• Healthcare

• Technology

How is the consumer discretionary sector trading compared to its historical averages?

• At a premium

• At a discount

• At par

• At a significant premium