Corbin Perception, a leading investor research and investor relations (IR) advisory firm, today released its quarterly Industrial Sentiment Survey, finding a deeply pessimistic mood surrounding the sector among global investors and analysts. The survey, part of Corbin’s Inside The Buy-side® research group, captures global investor and analyst views as the fourth quarter earnings season gets underway.

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The survey, based on responses from 39 investors and analysts globally who follow the Industrial sector and manage $2.3 trillion in total assets, reveals that nearly 70% of respondents perceive that the Industrial sector has already dipped into recession. With the S&P 500 dropping 8% in the first two weeks of 2016, Industrials face continued pressure this earnings season.

“Industrials are limping into earnings season and our survey suggests their growth outlook is negative for the foreseeable future,” said Rebecca Corbin, Founder and Managing Partner of Corbin Perception. “With continued pressure on commodities, China growth concerns, most other emerging markets in disarray and a persistently strong U.S. dollar, Industrials are fighting a massive uphill battle for organic growth. In turn, pessimistic investor sentiment continues to build, almost to the point of being overdone.”

Driving the dour mood among respondents: a total of 61% expressing bearish sentiment said they are very concerned about oil and energy headwinds, while 55% cite China as a top concern. Half are also uneasy about other emerging markets.

“Everyone denies it, but when you speak with CEOs at length, it sure sounds like a recession,” added a North American buy side investor.

The outlook for earnings and 2016 annual guidance is a slippery slope for Industrials, according to the survey. While cost-cutting initiatives should offset decelerating top-line growth to provide some support for EPS, a majority of buy-side (58%) and sell-side (54%) respondents expect earnings to be worse than consensus. Eight out of ten investors also believe annual guidance will be lower than consensus compared with 67% of sell side contributors.

Corbin continued, “This earnings season will be a litmus test for this normally resilient sector. Will industrials be able to protect their earnings base in the face of unquestionably decelerating growth and have their valuations already priced in the bad news for 2016?”

As one North American sell-side analyst notes, “Weaker expectations will be met with lower stock prices,” adding, “multiples should not expand at this point in the macro cycle.”

Survey findings also reflect a barbell scenario for different industrial markets – with respondents predicting that Residential Construction, Non-resi Construction and Building Products will outperform global GDP. Industries anticipated to continue to lag include Metals and Mining, Machinery, Materials and Transportation, which saw a 50% spike in bearish sentiment this quarter.

Finally, ongoing Corbin Perception research found that in a global growth slowdown, investors encourage executives to address scenario planning for an economic recession. “Our research shows that 84% of buy side respondents are keen on understanding how companies are preparing for the distressed growth environment,” said Corbin. “In this regard, it is critical for companies to address scenario planning and proactively communicate how they plan to tackle the challenging times ahead.”

Since 2006, Corbin Perception has tracked investor sentiment on a quarterly basis. Inside The Buy-side® and other research on real-time investor sentiment, IR best practices and case studies are available at CorbinPerception.com.