S&P500 Materials Sector – Operating Margins And Sales Per Share Charts

For reference purposes, below are two charts depicting quarterly Operating Margins and quarterly Sales Per Share for the Materials Sector of the S&P500, as depicted.  Each chart begins in the third (September) quarter of 2010 and extends through the first quarter of 2013.  The first quarter of 2013 data is estimated, as shown.

The underlying data is from Standard & Poor’s earnings estimates for the S&P500, from the update of June 13, 2013:

S&P500 Materials Sector Operating Margins 6-13-13

S&P500 Materials Sector Sales Per Share 6-13-13

 

Companies in the S&P500 Materials Sector include:

Air Products & Chem
Airgas Inc
Alcoa Inc
Allegheny Technologies
Ball Corp
Bemis Co
CF Industries Hldgs
Cliffs Natural Resources
Dow Chemical
duPont(E.I.)deNemours
Eastman Chemical
Ecolab Inc
FMC Corp
Freep’t McMoRan Copper&Gold’B’
Intl Flavors/Fragr
Intl Paper
LyondellBasell Industries’A’
MeadWestvaco Corp
Monsanto Co
Mosaic Co
Newmont Mining
Nucor Corp
Owens-Illinois
PPG Indus
Praxair Inc
Sealed Air
Sherwin-Williams
Sigma-Aldrich
U.S. Steel
Vulcan Materials

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StratX, LLC offers the above commentary for informational purposes only, and does not necessarily agree with the views expressed by outside parties.

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StratX, LLC (stratxllc.com) is a management consulting firm and strategic advisory that focuses on the analysis of current and future business conditions, and offers corporations and businesses advice, strategies, and actionable methods on how to increase revenue and profitability.

S&P500 Industrials Sector – Operating Margins And Sales Per Share Charts

For reference purposes, below are two charts depicting quarterly Operating Margins and quarterly Sales Per Share for the Industrials Sector of the S&P500, as depicted.  Each chart begins in the third (September) quarter of 2010 and extends through the first quarter of 2013.  The first quarter of 2013 data is estimated, as shown.

The underlying data is from Standard & Poor’s earnings estimates for the S&P500, from the update of June 6, 2013:

S&P500 Industrials Sector Operating Margins 6-6-13

S&P500 Industrials Sector Sales Per Share 6-6-13

Companies in the Industrials Sector include:

ADT Corp (The)
Boeing Co
Caterpillar Inc
C.H. Robinson Worldwide
Cummins Inc
Rockwell Collins
CSX Corp
Cintas Corp
Deere & Co
Danaher Corp
Dun & Bradstreet
Dover Corp
Equifax Inc
Emerson Electric
Eaton Corp Plc
Expeditors Intl,Wash
Fastenal Co
FedEx Corp
Fluor Corp
Flowserve Corp
Genl Dynamics
Genl Electric
Grainger (W.W.)
Honeywell Intl
Ingersoll-Rand Plc
Illinois Tool Works
Jacobs Engr Group
Joy Global
Lockheed Martin
Southwest Airlines
Masco Corp
3M Co
Northrop Grumman
Norfolk Southern
Pitney Bowes
PACCAR Inc
Precision Castparts
Parker-Hannifin
Pall Corp
Quanta Services
Ryder System
Robert Half Intl
Rockwell Automation
Roper Indus
Republic Services
Raytheon Co
Snap-On Inc
Stericycle Inc
Stanley Black & Decker
Textron, Inc
Tyco Intl
Union Pacific
United Parcel’B’
United Technologies
Waste Management
Xylem Inc

 

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StratX, LLC offers the above commentary for informational purposes only, and does not necessarily agree with the views expressed by outside parties.

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StratX, LLC (stratxllc.com) is a management consulting firm and strategic advisory that focuses on the analysis of current and future business conditions, and offers corporations and businesses advice, strategies, and actionable methods on how to increase revenue and profitability.

S&P500 Operating Margins And Sales Per Share Charts

For reference purposes, below are two charts depicting quarterly Operating Margins and quarterly Sales Per Share for the S&P500, as depicted.  Each chart begins in the third quarter (September) of 2010, and extends through the first quarter of 2013.  The first quarter of 2013 data is estimated, as shown.

The underlying data is from Standard & Poors earnings estimates for the S&P500, from the most recent update of June 6, 2013:

S&P500 Operating Margins 6-6-13 bigger

S&P500 Sales Per Share 6-6-13

 

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StratX, LLC offers the above commentary for informational purposes only, and does not necessarily agree with the views expressed by outside parties.

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StratX, LLC (stratxllc.com) is a management consulting firm and strategic advisory that focuses on the analysis of current and future business conditions, and offers corporations and businesses advice, strategies, and actionable methods on how to increase revenue and profitability.

The Current High Levels Of Corporate Profitability

Corporate profitability – and its sustainability – is a critical topic at this time for businesses.

While there are many ways to measure aggregate levels of corporate profitability, those used most prominently portray that overall corporate profitability is at (very) high levels when viewed from a long-term perspective.

One way to measure the level of corporate profitability is shown in a chart comparing corporate profitability as a percentage of GDP.   This chart, in which corporate profitability is depicted on an after-tax basis, is also depicted below. (For the chart of Corporate Profits After Tax, please see the May 30 post titled “After-Tax Corporate Profits Chart 1st Quarter 2013.”)

CP-GDP 5-30-13

Data Source: FRED, Federal Reserve Economic Data, Federal Reserve Bank of St. Louis; accessed May 30, 2013

This chart is through the first quarter and  the data was last updated on May 30.

A couple of statistics from the period shown on the chart, which dates back to the first quarter of 1947, include an average of 6.23% and a median of 5.87%.

As one might expect, other statistics concerning corporate profitability are also at or near record-high levels, such as the S&P500’s operating margins, operating profits, and EPS.

There have been various arguments offered as to the sustainability of current levels of corporate profitability; some arguments suggest that such levels are sustainable; others argue they are not.

There are various characteristics of this economic era that have been (very) favorable to corporate profitability; some of these factors include interest rates that, in general, are very low from a long-term historical perspective; subdued levels of wage growth; high-growth emerging markets that have expanded international sales – and in many cases margins; robust government deficits in many countries; and other factors.

I am of the belief (from an “all things considered standpoint”) that the current elevated levels of corporate profitability will not be sustainable; and the decline from these levels will have outsized ramifications in a variety of areas and for a number of parties.

In addition to the question as to whether corporate profitability is sustainable is the question as to what magnitude of a decline could be expected.  This topic is very complex and dependent upon many factors and assumptions.  However, it should be noted that a decline in after tax corporate profits as a percentage of GDP from it current level of 10.857% to the long-term average of 6.23% would represent a 43% decline.  Of course, due to a variety of factors, there is always the possibility of dropping below the average, perhaps substantially.

Such a decline in overall corporate profitability would likely impact each corporation differently, dependent upon a variety of its characteristics, including its industry, size, and numerous firm-specific business and financial characteristics.  From a corporate planning and risk management perspective, it behooves firms to (at least) contemplate, if not actively plan for a business environment in which a lower level of aggregate profitability exists.

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StratX, LLC (stratxllc.com) is a management consulting firm and strategic advisory that focuses on the analysis of current and future business conditions, and offers corporations and businesses advice, strategies, and actionable methods on how to increase revenue and profitability.

Profitability And Competition In The Grocery Business

Today (June 6), CNBC published an article titled “What’s Behind the Rush Into the Low-Margin Grocery Business.”  The article discusses various issues regarding competition and profitability in the grocery business.

Notable excerpts include:

Americans spend more than $565 billion dollars a year on groceries. After all, everybody eats, everyday…and more than once.

Despite the high revenue, the profit margins traditionally have been low in this business, but that hasn’t stopped retail giants Amazon.com and Wal-Mart Stores from escalating the national food fight.

also:

That said, grocery, online or off-line, remains a low-margin business. “Grocery is among the thinnest margins out there in retail. The average grocer probably gets a 2-, 2.5-, to 3-percent type operating margin. That’s a very slim margin, and that’s before interest and taxes,” Telsey Advisory’s Feldman said.

That doesn’t mean it’s a turn-off for the online behemoth, Feldman said. “Amazon’s history has been all about capturing market share and going as low as they can possibly go on price, sometimes even taking losses from what we can tell, if that’s the case, I don’t see why grocery would be any different, he said.”

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StratX, LLC offers the above commentary for informational purposes only, and does not necessarily agree with the views expressed by these outside parties.

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StratX, LLC (stratxllc.com) is a management consulting firm and strategic advisory that focuses on the analysis of current and future business conditions, and offers corporations and businesses advice, strategies, and actionable methods on how to increase revenue and profitability.