Corporate Revenue Growth

The “lagging” nature of corporate revenue growth is a continuing characteristic of today’s business environment.

This topic has been addressed in a variety of posts and other writings, most recently in the April 29 StratX, LLC post titled “Corporate Revenues Under Pressure.”

Of note, one can see this low overall rate of revenue growth reflected in a variety of 1Q2013 operating results.  For instance, one can see that 1Q2013 revenue growth for the S&P500 Industrials Sector is expected to be .3%, according to Thomson Reuters’ “This Week In Earnings” of May 24.

There are also some notable statistics in the FactSet Earnings Insight of May 17, regarding both 1st quarter and 2nd half S&P500 revenue growth.

One excerpt regarding 1st quarter revenues:

In aggregate, companies are reporting sales that are .1% above expectations.  Over the previous four quarters on average, actual sales have exceeded estimates by .7%.

Another excerpt pertaining to 2nd half 2013 revenues:

However, estimated revenue growth rates for both Q3 2013 (3.4%) and Q4 2013 (1.9%) are expected to be well below estimated earnings growth rates. No sector is expected to see double-digit revenue growth in either quarter.

_____

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

S&P500 Earnings Estimates Trends

The profitability of the S&P500 companies is a notably important topic, for a variety of reasons, at this point in time.

FactSet publishes a report titled “Earnings Insight” that contains a variety of information including the trends and expectations of S&P500 earnings.

For reference purposes, here are two charts as seen in the “Earnings Insight” (pdf) report of May 17, 2013:

from page 17:

(click on charts to enlarge images)

CY Bottom-Up EPS vs. Top-Down Mean EPS (Trailing 26-Weeks) 

EconomicGreenfield 5-24-13 FactSet 5-17-13 EPS Forecasts

from page 18:

Calendar Year Bottom-Up EPS Actuals & Estimates

EconomicGreenfield 5-24-13 FactSet 5-17-13 EPS Forecasts CY Actual and Estimates

_____

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

Earnings Forecasts For The S&P500

As many are aware, Thomson Reuters publishes earnings estimates for the S&P500.

The following estimates are from Exhibit 12 of “The Director’s Report” of May 23, 2013, and represent an aggregation of individual S&P500 component “bottom up” analyst forecasts:

Year 2013 estimate:

$110.89/share

Year 2014 estimate:

$123.46/share

Year 2015 estimate:

$135.99/share

_____

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

—–

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.

Fast Food Industry Profitability

Margins, profitability and “value” in the fast food industry are issues that are becoming increasingly prominent.

A Wall Street Journal article of May 8, titled “McDonald’s, Wendy’s Battle for Value-Centric Customers” contains additional information concerning various issues including those concerning price affordability and price competitiveness.

Notable excerpts include:

McDonald’s Corp. and Wendy’s Co. are struggling to attract cost-conscious consumers who are demanding better deals than even these low-price fast-food chains offer.

also:

Fast-food chains like McDonald’s and Wendy’s may seem like they would be resilient in this tough economy, but consumers have come to expect $1 burgers, and more brands have jumped on the bandwagon, with chains like Yum Brands Inc.’s Taco Bell and Arby’s Restaurant Group testing out new value menus.

also:

McDonald’s last month reported weak earnings growth for the first quarter, saying it is sacrificing profit margins by focusing on value menus to avoid losing customers.

_____

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

—–

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.

 

1Q2013 Corporate Revenues

As stated in the “Businesses In A Weak Economy” page found on the StratX,LLC.com site :

One condition that seemingly lacks recognition – yet is highly material – is the continued “lagging” nature of revenue growth.

Today, the Wall Street Journal published an article titled “Companies Feel Pinch On Sales In Europe,” in which first quarter S&P500 revenue forecasts, as well as various company revenue results are discussed.  A few notable excerpts include:

With earnings reports in from more than half the companies in the Standard & Poor’s 500-stock index, first-quarter revenue for the group is expected to shrink 0.3% from a year earlier, according to Thomson Reuters. That would cut short the sales improvement reported at the end of last year and mark the third quarter out of the past four in which revenues have failed to grow by 1% or more.

also:

Some investors are troubled by the weakness because they view revenue as a better gauge of global economic health than profits. “The lack of revenue growth really doesn’t justify new head count or capital expenditure,” said Jim Russell, senior equity strategist at US Bank Wealth Management. “This is one of the reasons we see a stagnating sticky high unemployment rate.”

_____

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

—–

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.