With the ongoing trade war between the U.S and China, there has been increasing volatility in the stock market. The back and forth banter between President Trump and China has caused uncertainty for companies and investors, and it looks like increasing tensions between both sides has set itself in for the long haul.
With both sides reluctant to budge, companies that rely heavily on overseas revenue streams have the most to lose from the ongoing conflict. According to estimates, companies that derive more than half of their sales internationally are expected to see a 9.3% decrease in second-quarter earnings. On the other hand, companies with revenue streams from inside the U.S could see their earnings grow by 1.4% in the second quarter.
Let’s take a deeper look at some of the companies that depend on revenue streams from outside the U.S.
Apple (AAPL - Free Report) is a company with a lot at stake during times of uncertainty with foreign countries. Apple depends on China for rare earth minerals that are used to manufacture iPhones, and China is also Apple’s third largest market. The company had 57.9% of their earnings come from outside the United States in 2017, the most recent year the company has full data available. According to S&P Dow Jones Indices and FactSet, Apple is expected to see a fall of 14.6% in quarterly earnings, as well as a 10.3% drop from the same period a year ago.
Apple is a Zacks Rank #3 (Hold), with a Style Score of B in Value. The stock has a forward P/E ratio of 16.97 as well as a PEG ratio of 1.65, which is lower than the industry average of 2.32. Apple also has a Style Score of B in Growth; it has a historical EPS growth rate of 11.61% which is much better than its industry’s average. Apple can also appeal to long term investors as it has an expected long term (3-5 years) EPS growth of 10.29%.
Boeing (BA - Free Report) gets 54.7% of its proceeds from overseas, and this dependence could prove detrimental for the company, as quarterly earnings are projected to fall roughly 43% and decline 45.6% from a year ago. Nevertheless, Boeing sits at a Zacks Rank #3 (Hold), with a Styles Score of B in Growth. The company has a long term (3-5 years) expected EPS growth of 11.17% to go along with an above industry average historical EPS growth rate of 17.29%. Boeing has had its share of declines lately, including issues with its 737 MAX which had to be grounded after two fatal crashes. Amidst the speculation and fallout from the two tragic crashes, further complications from the trade war is the last thing this company needs.
Intel (INTC - Free Report) gets a whopping 80% of its revenues from outside of the U.S., and countries such as China, Singapore, and Taiwan bring in significant revenue for the company. The company’s earnings are estimated to decline by more than 14% from the year-ago period. Intel receives a Zacks Rank #3 (Hold) with a Style Score of B in Value. The company has forward P/E ratio of 11.04 and a PEG ratio of 1.47. Both of the company’s P/E and PEG ratios are below the industry average, making its stock price relatively cheap compared to the rest of stocks in the industry. Furthermore, Intel also has an earnings yield of 9.07% that is also above industry average, a metric that could attract value seeking investors.
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