After-Tax Corporate Profits Chart 4th Quarter 2018

Today’s (March 28, 2019) GDP release (Q4 2018,Third Estimate) was accompanied by the Bureau of Economic Analysis (BEA) Corporate Profits report (Preliminary Estimate) for the 4th Quarter.

Of course, there are many ways to adjust and depict overall Corporate Profits.  For reference purposes, here is a chart from the St. Louis Federal Reserve (FRED) showing the Corporate Profits After Tax (without IVA and CCAdj) (last updated March 28, 2019, with a value of $1946.013 Billion SAAR):

Corporate Profits After Tax chart

Here is the Corporate Profits After Tax measure shown on a Percentage Change from a Year Ago perspective:

Corporate Profits After Tax Percent Change From Year Ago

Data Source: FRED, Federal Reserve Economic Data, Federal Reserve Bank of St. Louis: Corporate Profits After Tax [CP]; U.S. Department of Commerce: Bureau of Economic Analysis; accessed March 28, 2019; https://research.stlouisfed.org/fred2/series/CP

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RevSD, LLC offers the above data and projections for informational purposes only, and does not necessarily agree with information provided by these outside parties.

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ProfitabilityIssues.com is published by RevSD, LLC (RevSD.com).  RevSD, LLC is a management consulting firm and strategic advisory that focuses on the analysis of current and future business conditions, and given these conditions, offers corporations and businesses advice, strategies, and actionable methods on how to optimally increase revenues and profitability.

Q1 2019 Projected S&P500 Earnings Growth Rates

The Refinitiv “This Week In Earnings” (pdf) report dated February 1, 2019 contains information concerning projected S&P500 earnings growth for the 1st quarter.

An excerpt from page 5 of the report:

The estimated earnings growth rate for the S&P 500 for 19Q1 is 0.7%. If the energy sector is excluded, the growth rate improves to 1.3%. The S&P 500 expects to see share-weighted earnings of $320.4B in 19Q1, compared to share-weighted earnings of $318.3B (based on the year-ago earnings of the current 505 constituents) in 18Q1.

Six of the 11 sectors in the index expect to see an improvement in earnings relative to 18Q1. The health care and industrials sectors have the highest earnings growth rates for the quarter, while the energy sector has the weakest anticipated growth compared to 18Q1.

The report also contains a table (Exhibit 5A) that shows projected total earnings and earnings growth for both the S&P500 and by S&P500 sector for Q1 2019.

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RevSD, LLC offers the above data and projections for informational purposes only, and does not necessarily agree with information provided by these outside parties.

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ProfitabilityIssues.com is published by RevSD, LLC (revsd.com).  RevSD, LLC is a management consulting firm and strategic advisory that focuses on the analysis of current and future business conditions, and given these conditions, offers corporations and businesses advice, strategies, and actionable methods on how to optimally increase revenues and profitability.

Chart Of S&P500 Net Profit Margins 2013 Through 2019

For reference purposes, below is a chart depicting S&P500 net profit margins for each of the years 2013 – 2019.  As seen in the chart, the net profit margin for 2018 & 2019 is projected.  The chart is from the FactSet Earning Insight report of December 21, 2018, p. 10:

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RevSD, LLC offers the above commentary for informational purposes only, and does not necessarily agree with all (or any) of the views expressed by these outside parties.

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ProfitabilityIssues.com is published by RevSD, LLC.  RevSD, LLC is a management consulting firm and strategic advisory that focuses on the analysis of current and future business conditions, and given these conditions, offers corporations and businesses advice, strategies, and actionable methods on how to optimally increase revenues and profitability.

Chart Of S&P500 Earnings & Revenue Growth From 2010-2018

For reference purposes, below is a chart depicting S&P500 earnings & revenue growth on a yearly basis for 2010 – 2018.  As seen in the chart, S&P500 earnings and revenue growth for 2018 is projected.  The chart is from Page 4 of the FactSet Earnings Insight report dated December 21, 2018:

S&P500 Earnings & Revenue Growth 2010 - 2018

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RevSD, LLC offers the above commentary for informational purposes only, and does not necessarily agree with all (or any) of the views expressed by these outside parties.

—–

ProfitabilityIssues.com is published by RevSD, LLC.  RevSD, LLC is a management consulting firm and strategic advisory that focuses on the analysis of current and future business conditions, and given these conditions, offers corporations and businesses advice, strategies, and actionable methods on how to optimally increase revenues and profitability.

Overall Q3 2018 Corporate Profits Relative To GDP

In the last post (“After-Tax Corporate Profits Chart 3rd Quarter 2018“) I displayed, for reference purposes, a long-term chart depicting Corporate Profits After Tax.

There are many ways to view this measure, both on an absolute as well as relative basis.

One relative measure is viewing Corporate Profits as a Percentage of GDP.  I feel that this metric is important for a variety of reasons.  As well, the measure is important to a variety of parties, including investors, businesses, and government policy makers.

As one can see from the long-term chart below (updated through the third quarter), (After Tax) Corporate Profits as a Percentage of GDP is at levels that can be seen as historically (very) high.  While there are many reasons as to why this is so, from a going-forward standpoint I think it is important to recognize both that such a notable condition exists, as well as contemplate and/or plan for such factors and conditions that would come about if (and in my opinion “when”) a more historically “normal” ratio of Corporate Profits as a Percentage of GDP occurs.  This topic can be very complex in nature, and depends upon myriad factors.  In my opinion it deserves far greater recognition.

(click on chart to enlarge image)

Corporate Profits As A Percentage Of GDP

Data Source: FRED, Federal Reserve Economic Data, Federal Reserve Bank of St. Louis; accessed November 28, 2018

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RevSD, LLC offers the above data and projections for informational purposes only, and does not necessarily agree with information provided by these outside parties.

—–

ProfitabilityIssues.com is published by RevSD, LLC (RevSD.com).  RevSD, LLC is a management consulting firm and strategic advisory that focuses on the analysis of current and future business conditions, and given these conditions, offers corporations and businesses advice, strategies, and actionable methods on how to optimally increase revenues and profitability.