Miton's Grieves: US winners and losers from the tax reforms

Likely to benefit domestically-orientated companies

To assess the real benefit of President Trump's tax reform, investors need to consider the impact of state and local taxes, tax credits for items like R&D and capital investment, and the impact of taxed foreign earnings, writes Hugh Grieves, manager of the Miton US Opportunities fund.

In the first year, the new lower tax rate could be completely offset by the need for companies to write down deferred tax assets and/or pay tax on any repatriated profits from prior years. Due to this complexity, Wall Street analysts have been hesitant to amend individual company estimates without explicit guidance from the companies' management. The best top-down guestimates we have seen so far have come from Wolfe Research, stating S&P 500 earnings could increase by as much as 11%. So far, the only company to give such guidance is FedEx, historically a 35% tax rate payer, implying a...