Tracking International Growth Critical for Nowcasting Company Revenues

With looming policy changes in trade tariffs, we wanted to share our insights on the international exposure for US Industrial companies. Based on tracking the geographical breakdown and currency impact on revenues for over 130 US companies, we find that, the US Industrial companies have on average 72% exposure to North America (66% US), 16% Europe, 9% Asia, and 3% Latin America. The highest international (non-US) exposures are in Auto Parts (58%), Machinery (47%), and Chemicals (46%), and least in Transportation, Metals & Mining, and Distributors (12% each).

However, when analyzing contributions to changes in quarterly revenue growth estimates (2nd derivative of revenues as per AKAnomics historical models) over the last 10 years, we find that the international businesses contributed close to half of the growth changes (eg Europe 24%, Asia 19%) far greater than their corresponding geographies (e.g., Europe 16%, Asia 9%). In other words, the international economies have fluctuated a lot more than North America over this period, thus punching well above their weights.

This phenomenon is even more pronounced in sectors like Electrical Equipment & Multi-Industry, and Chemicals. We hence believe that tracking international growth in detail is critical to Nowcasting US Industrial company revenues. Most industry analysts pay only cursory attention to detailed international macro data. AKAnomics infrastructure bridges this gap, and allows an unprecedented visibility into growth not only at regional level, but more importantly, at industry level in each region, so as to interpret what the global data is implying for each company’s business.