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ETI AlphaDirect Weekly Watch, 5-27-2016

ETI AlphaDirect Weekly Watch, 5-27-2016


The alphaDIRECT Overview

E&ET Index. This week ending 5/27/2016, the ETI Alpha Direct Index underperformed the broader market and was up 3.1% week-over-week (vs. the S&P 500 Index increase of 2.3%, Russell 2000 increase of 3.4% and the Nasdaq Composite increase of 3.4%). This compares to an increase of 4.7% week-over week for the Industrial Technologies index. The E&ET Index is +9.8% YTD vs. +2.7% YTD for the S&P 500, +1.3% for the Russell 2000 and –1.5% 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.

• Department of Energy Announces 14 New Projects for Window Efficiency Technologies. The Energy Department’s Advanced Research Projects AgencyEnergy (ARPA-E) today announced $31 million in funding for 14 projects as part of ARPA-E’s newest program: Single-Pane Highly Insulating Efficient Lucid Design (SHIELD). SHIELD project teams are developing innovative window coatings and windowpanes that could significantly improve the energy efficiency of existing single-pane windows in commercial and residential buildings.

• New Study Examines Progress toward SunShot Initiative Goals, Identifies Emerging Solar Energy R&D Opportunities for 2020 and Beyond. The Energy Department released the On the Path to SunShot reports, a series of eight research papers examining the state of the U.S. solar energy industry and the progress made to date toward the SunShot Initiative’s goal to make solar energy cost-competitive with other forms of electricity by 2020. The solar industry is currently about 70 percent of the way towards achieving the Initiative’s 2020 goals, but as solar has become more affordable, helping the industry grow by an astonishing 23-fold since the beginning of the Obama Administration, new challenges and opportunities have emerged.

• 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 5/27/2016, there were 6 increases and 2 declines in 2016 revenue estimates, 6 increases and 4 declines in 2016 EPS consensus estimates. This compares to last week’s 5 increases and 2 declines in 2016 revenue estimates, and 6 increases and 4 declines in 2016 EPS consensus estimates