Low valuations suggest an earnings downturn is on its way
By Stephen Wilmot
Jan. 3, 2017 5:03 a.m. ET
In cyclical industries, the best of times for manufacturers tend to be the worst of times for investors.The auto sector is a case in point. Car sales are running ahead of their precrisis peak in the U.S., but earnings multiples, even after a postelection bounce, are meager by historical standards. Investors should probably interpret low valuations as a warning flag rather than a discount sticker: A downturn in earnings is surely on its way.
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