# TSX index price targets and earnings estimates thread



## dime (Jun 20, 2013)

Is there a website that regularly updates the earnings data for the TSX index? Anyone know where to find quarterly earnings? Whats the long term average PE for the TSX or TSX60? If you see anything please share it in this thread. Since the TSX composite index is so widely followed and traded... where can the retail investor quickly lookup the earnings data for the composite index? Please share!

The S&P 500 index regularly has current and estimated earnings published and analysts regularly update their price targets for the index. The TSX composite index and the TSX 60 also have the same, but it seems harder to find. 

The oldest and largest ETF in Canada is the XIU for the TSX 60. Not far behind is XIC which tracks the TSX composite index of 250+ companies for a paltry 0.05% management fee. The TSX composite index was launched in 1977 and is widely followed. The TSX 60 was launched in 1998 and is also a widely followed portfolio index of the large cap TSX market designed to reflect the sector weights of the TSX Composite.

Knowing the earnings estimates and average PE ratios for these indexes is useful in trading the XIU or XIC. It helps when setting price targets and knowing if the index is fundamentally over or under valued relative to the expected growth. 

"Buying the index" seems to be a lower risk investment over the long term with an average annual gain of 7% since 1988, a wide diversification of 250 companies, a current yield higher than inflation.

The main debate is deciding what is a fair price to pay, and knowing what the experts have calculated the forward earnings estimates to be. The TSX is currently clinging to a gain of only 2.5% for the 2014 year. 



Here's what I've found after some time spent searching around: 

TSX 2015 EPS estimate of $900-$975 by Scotia, National, & BMO on Dec 10. At Friday's close of 13731 this gives a forward PE estimate of 14.08 - 15.25
TSX 60 estimated EPS of $55 by S&P on Nov 28. At Friday's close of $803.77 thats a forward PE of 14.4 for the TSX 60.

In September the median 2015 target was 16000 at PE 15 with an EPS target of $1066. 

National Bank reports trailing earnings of $905. As of yesterday this is a trailing PEof 15.17
The 10 year average trailing PE for the TSX composite is 17.3

Sources:
------------------------------------------------
Weekly Market Strategy from ScotiaMcLeod Dec 10, page 2:
"2015E TSX target 15,000, Earnings estimate $900." 
http://www.thejohntrimgroup.com
http://seanfahy.com/markets/

BMO Nesbitt Burns "Portfolio Strategy" December under "Market Valuations" p20
"We updated our fair value DCF (Discounted Cash Flow) models for the TSX and S&P yielding fair values of 15,000 and 2300 respectively." They give a consensus earnings per share estimate of $975 for 2015 and earnings growth of 6% for the years between 2015 and 2018. 
http://nesbittburns.bmo.com/getimage.asp?content_id=63273

National Bank year end target for 2015 is 16200 for the TSX. Earnings estimate of $965 by Q4 2015.
Actual earnings $905 as of Nov 25. 
https://www.nbc.ca/content/dam/bnc/en/rates-and-analysis/economic-analysis/monthly-equity-monitor.pdf

The S&P gives a factsheet for the TSX 60 which lists the estimated Forward PE ( updated at month end?)
Their Nov 28 projected PE was 15.48. With the Nov 28 close of $863 we get an estimated 2015 EPS of $55.74. 
http://ca.spindices.com/indices/equity/sp-tsx-60-index


Scotiabank Global Views - Nov 14 - in the "Portfolio Strategy" section page 12-13
"Although commodity prices have recently stumbled, TSX 2015 EPS consensus has remained relatively stable near $1030." They estimate the downside risk to "EPS in the $970 to $990 range next year" 
http://www.gbm.scotiabank.com/English/bns_econ/globalviews141114.pdf

Morningstar gives a Price/Prospective Earnings of 16.47 as of 30/11/2014

Blackrock gives a trailing PE of 17 for the XIC and 17.3 for the XIU

In the article "Analysts expect TSX rally to cool in 2015" Sep 25 The Globe and Mail 
The article states "... TSX composite index will reach 15,500 by the end of the year" 
"The median forecast in the poll of 41 market analysts and strategists ... showed the TSX then rising about 6 per cent from where it is now to 16,000 by mid-2015"

GLC Asset Management Group "Economic and Market Outlook" June 16, 2014 page 9 
TSX Composite 10 year PE average 17.3


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## dime (Jun 20, 2013)

From Raymond James - Insights and Strategies, Jan. 12, 2015, Pg 2:

"S&P/TSX earnings estimate of $900/share which equates to growth of 6% Y/Y. Our earnings forecast is 5% below the current bottom up consensus estimate of $950/share, as we see the potential for further negative earnings revisions from the resource sectors."

"With the large equity gains since the financial crisis, valuations have expanded markedly with the S&P/TSX
currently trading at 18.4x trailing earnings and 1.8x price to book value (P/B). For perspective, at the March 2009 low, the S&P/TSX traded at 10x earnings and 1.2x P/B. Clearly stocks are no longer “cheap” but nor are they extremely “expensive”, in our view. While history suggests the potential for further multiple expansion, this is not our base case for this year. We see upside in 2015 being driven by corporate earnings growth. Our official S&P/TSX price target is 15,300, which is based on a 17x P/E multiple and our $900/share earnings forecast. Adding in a current 2.8% dividend yield, we see the potential for a total return of 7.5% in 2015 from current levels."


Raymond James publishes excellent regular market commentary and research for both Canadian and US markets which is freely available here: http://www.raymondjames.ca/en_ca/personal_investing/market_commentary/

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ScotiaMcLeod Portfolio Advisory Group, Weekly Market Strategy, Jan. 14, 2014, pg. 2:

2015 E target: 15,000
TSX earnings: $900.00
12 mo. Price Earnings: 16.66

http://www.seanfahy.com/reports/Weekly_Strategy/weekly.pdf


"The Canadian equity market will likely lag the U.S. in 2015, but a potentially strong second half recovery in the energy sector could tilt the scales in Canada’s favour. Consensus 2015 earnings growth expectations for the S&P/TSX Composite Index, which currently stand at 3.5% YoY, seem to be getting hit from multiple sides as analysts revise assumptions lower. ... The good news in this rather somber outlook for 2015 is that equity prices seem to be already discounting these views, in our opinion."

Source: http://beltramewealthmanagement.com/wp-content/uploads/2015/01/Top-10-Canada-2015-Final.pdf



Do you know of any good online sites that regularly reports earnings for the TSX compostite index or TSX 60? Please share it in this thread!


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## dime (Jun 20, 2013)

The TSX closed at 15,264.81 for the week. The TSX composite index has gained about 9% in a little more than a month. No doubt this is explained by some recovery in the price of oil. In the past month WTI has gained about 20% a barrel to $52.78. About 22% of the index is the energy sector. The price of other major sectors such as financials and materials are also affected by the price of oil. 

But the biggest news of all was the BOC surprise rate cut driving fixed income yields even lower, and providing additional investor incentive towards equities. Another rate cut may also be ahead. The overnight rate cut is expected to remain until the end of 2016. 
http://www.td.com/document/PDF/economics/finances/DollarsAndSense_January2015.pdf


This now puts the index near the year end targets estimated by Scotia and Raymond James. It will be interesting to see if they raise estimates if the recovery in the oil price holds. 


Scotia's "Weekly Market Strategy" indicates 15,000 as the price target for 2015 and 2016. 
https://www.seanfahy.com/reports/Weekly_Strategy/weekly.pdf


Raymond James "Insights & Strategies" S&P/TSX price target is 15,300 for 2015. 
http://www.raymondjames.ca/en_ca/personal_investing/market_commentary/insights_and_strategies.aspx


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## dime (Jun 20, 2013)

Interesting guidance from Raymond James in the latest "Weekly Trends" report:



> However, with the recent push higher, the S&P/TSX is currently overbought with an RSI reading
> of 70. Additionally, the index is quickly approaching stiff technical resistance at the
> 15,550 to 15,650 range. Given these technical factors we believe the S&P/TSX is
> poised to pullback in the short-term. Key support levels that the S&P/TSX could pull
> ...












View attachment 3698










source:
http://www.raymondjames.ca/Branches/premium/pdfs/WeeklyTrends/WeeklyTrends150220.pdf


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## RBull (Jan 20, 2013)

Predictions, forecasts and timing is too much noise for me. 

But I'm spending mode instead of buying.


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## dime (Jun 20, 2013)

The TSX composite index closed at 14,812.42 this week up only 1.23% for the year.


Its been a weak Q1 in Canada with Home sales falling 2.4% and Retail sales volumes down 1.2% for the second consecutive month.

BMO Global Equity Weekly
”We still believe fair value for the S&P/TSX Composite Index (S&P/TSX) and S&P 500 Index (S&P 500) are approximately 15,000 and 2300 respectively, "

BMO estimates consensus EPS for 2015 at 975 and fair value of 15,060 (Pg10)

Source:
http://nesbittburns.bmo.com/getimage.asp?content_id=63269

National Bank Monthly Equity Monitor 
April report on p6 reiterates their year end Q4 target for the TSX is 16200.
EPS of 900 and dividend of 441

This gives an estimated Forward PE ratio of 16.46 and 2.97% div yield on Friday's closing price.
Source:
https://www.nbc.ca/content/dam/bnc/.../economic-analysis/monthly-equity-monitor.pdf


RBC's Spring 2015 GLOBAL INVESTMENT OUTLOOK (pg 4)
RBC forecasts a Feb 2016 target of 160000. They chart an estimated range based on normalized earnings for Feb. '16 from 13212 - 19721 (Mid: 16466) (pg43,60)

Source: http://media.rbcgam.com/pdf/gam/global-investment-outlook.pdf

For investors that trade the TSX composite index through the XIC ETF, the RBC & National Bank estimates an optimistic year end target offering 9%+ upside from current levels (and an even healthier total return including dividends.). This equates to year end price target of about 25.50 in the XIC.

The BMO estimate suggests the potential for further downside ahead if the negative sentiment deepens for Canadian markets. Looking closer at weekly XIC chart the 100 weekly Moving Average is $22.20 about 5% lower than Fridays close. This could be a possible entry point if the market selling volume deepens into a correction in the coming weeks.








https://www.tradingview.com/x/wLq8adJ8/


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## dime (Jun 20, 2013)

Scotia's "Weekly Market Strategy" (p. 2) indicates a reduced price target of 14,800 (from 1500) for 2015 and 2016. From Friday's close this is -3.5% lower, approximately at the 100 day moving average (blue line on the chart below).
read more here: http://business.financialpost.com/i...-year-end-tsx-target-to-14800?__lsa=958f-7c8e
https://www.seanfahy.com/reports/Weekly_Strategy/weekly.pdf


From S&P Capital IQ Insights: GLOBAL INVESTMENT PROSPECTS AND STRATEGY, April 17, 2015


> Anticipated tepid macroeconomic growth in Australia and Canada, coupled with exceptionally high one-year forward price/earnings multiples (p/e) of equal to or fractionally greater than their twenty-year historical averages (15.1x and 16.7x, respectively), argue for underweighting stocks of both the Sydney and Toronto stock exchanges in the period immediately ahead.


https://www.spcapitaliq.com/insights/q2-global-investment-prospects-and-strategy


From Raymond James - Weekly Trends, March 27, 2015 https://www.raymondjames.ca/en_ca/Branches/premium/pdfs/WeeklyTrends/WeeklyTrends150327.pdf

Are Equities Overvalued? pg 2


> "Looking at the S&P/TSX, it is currently trading at 19.8x trailing earnings which is a 4% premium to its average since 1994. On a forward basis the S&P/TSX trades at 18.2x which is a 15% premium to its long-term average. The S&P/TSX trading at higher earnings multiples than the S&P 500, in conjunction with its weaker earnings outlook, factors into our preference for US equities. However overall, we believe that these valuation metrics suggest that the North American equity markets are modestly overvalued, and not nearly as extreme as some posit. "




BMO Nesbitt Burns "Portfolio Strategy" April, 2015 p5 http://nesbittburns.bmo.com/getimage.asp?content_id=63273



> ... we updated our fair value DCF (Discounted Cash Flow)
> models for the S&P/TSX and S&P 500 yielding fair values of 15,000 and 2,300 respectively. Our conclusion is that the S&P has
> about 11% upside to our fair value estimates while the S&P/TSX appears fairly valued currently.


They estimate a 2015 EPS of 975 for 2015 which gives a forward PE multiple of 15.7x at Friday's close.


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## dime (Jun 20, 2013)

The past few months have seen about a 6% decline in the TSX Composite index from it's highs at the end of April. The TSX is currently down -0.54% year to date. 

Technical levels: Resistance 15,400, Support 13,750, 14,400 50 week moving average.

National Bank has lowered it's target (5% more optimistic than Scotia)


> Our year-end targets are 15,600 (revised down from 16,200) for the S&P/TSX and 2,220 for the S&P 500.


National Bank Monthly Equity Monitor, July 2015 (p1)
https://www.nbc.ca/content/dam/bnc/.../economic-analysis/monthly-equity-monitor.pdf

BMO offers a general year end range of 7% from


> "14,000 – 15,000 for the TSX"


BMO Nesbitt Burns "Portfolio Strategy", June 2015 (p6)
http://nesbittburns.bmo.com/getimage.asp?content_id=63273

However BMO strategists also report:


> Maintaining 15,600 Price and $900 Earnings Targets


Canadian Strategy Snapshot, "What’s the Call on Canada?", June 25, 2015 (p3)
http://research-ca.bmocapitalmarkets.com/documents/A07BD901-A1F3-41E6-A4D6-7425D8789054.PDF


Scotia reiterates it's year end target of 14,800 (which was reduced earlier in the year). 
*ScotiaMcLeod Portfolio Advisory Group "Weekly Market Strategy" Jun 24, 2015 (p2)
http://www.smlibrary.com/media/documents/Research-and-Reports/Weekly/wms.pdf



Technical analysis charts: (right click to view larger)
This weekly chart (below) highlights some of the year end targets as well as some key technical support levels. 









This (below) weekly log chart of the TSX shows we are within 1% of the lower trend line since 2009 suggesting a critical point has been reached. Will this trend hold and National Bank's year end target be reached? If not, and this trend line is broken, it would likely be a bearish sign of Canadian economic recession ahead. 










Indeed, BMO analysis report that:


> Canadian businesses are expecting the
> worst employment growth since the 2008
> recession.


Canadian Strategy Snapshot, "What’s the Call on Canada?", June 25, 2015


If you trade the TSX using the XIC ETF here's some useful numbers:
Current yield: 2.77%

Convert the numbers for the TSX at a factor of 630 for the XIC:
Resistance @ 24.45 (6.4% above)
support @ 21.82 (4.8% below)
XIC 50 week moving average 22.80. 

Targets: 
Scotia 14,800 becomes 23.50
National 15,600 becomes 24.75
(There's about a 5% difference between each)












And, as always, please share if you know of any other research reports which offer analyst year end targets for the TSX (like TD, Royal etc).


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## CPA Candidate (Dec 15, 2013)

The TSX, the boneyard for indexers.


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## dime (Jun 20, 2013)

The S&P/TSX Composite covers approximately 95% of the Canadian equities market. Paying attention to the TSX is useful for many reasons. For example it tells us the overall valuation of the Canadian equity markets. 

Knowing if the actual TSX composite is overvalued or undervalued is fundamental to successful trading of the XIC ETF. The XIC is among the top ETF's in Canada for largest total assets under management (over 2 billion) and averages 150,000 shares traded daily. It's also one of the lowest cost MER at 0.1%


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## CalgaryPotato (Mar 7, 2015)

dime said:


> It's also one of the lowest cost MER at 0.1%


They dropped it to .05% now.


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## RBull (Jan 20, 2013)

CPA Candidate said:


> The TSX, the boneyard for indexers.


While I agree the past 12 months isn't great indexers are interested in the long term and the TSX over time has done well. Perhaps your yardstick is too short or your definition is too narrow. 

My primary TSX "index" holding has done ~25%+ in the past 12 months - ZLB 

If that's a boneyard I'll take it.


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## dime (Jun 20, 2013)

CalgaryPotato said:


> They dropped it to .05% now.


The management fee is .05% but I believe the full MER is .10 due to taxes some other hidden fee. It's a bit misleading the difference between what is shown on the Ishares site as the management fee and what is shown as the MER on morningstar or your brokerage. 

Either way XIC is among the lowest ETF MERs in Canada that I know of. There's also HXT at 0.06 MER for the TSX 60 and ZCN at 0.09 MER for the TSX Composite. ZCN is about half the size of XIC and an average daily volume of only 35k shares traded. 

At a fraction higher for 0.13% MER is XSP the iShares S&P500 (CAD-hedged) which trades at a decent volume of about 257K shares daily (much more than XIC).

I'd like to learn to trade the TSX60 ETF because of HXT has a higher volume and lower MER. But its much more difficult to find EPS and year end target data on the TSX60 index than the TSX composite itself.


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