S&P500 EPS Forecasts From Standard & Poor’s December 17, 2020

As many are aware, Standard & Poor’s publishes earnings estimates for the S&P500.  

For reference purposes, the most current estimates are reflected below, and are as of December 17, 2020:

Year 2020 estimates add to the following:

-From a “bottom up” perspective, operating earnings of $120.81/share

-From a “top down” perspective, operating earnings of N/A

-From a “bottom up” perspective, “as reported” earnings of $93.36/share

Year 2021 estimates add to the following:

-From a “bottom up” perspective, operating earnings of $166.63/share

-From a “top down” perspective, operating earnings of N/A

-From a “bottom up” perspective, “as reported” earnings of $144.00/share

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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

Firms’ Expectations Concerning Inflation And Pricing Changes

The Federal Reserve Bank of Atlanta publishes a monthly report titled “Business Inflation Expectations” (BIE) that contains statistics from a survey of regional businesses’ views on various factors that impact profitability.  These factors include unit costs, unit cost expectations, sales levels, pricing, profit margins, and other factors.

As described on the site:

“Approximately 300 panelists receive the survey each month. Panelists represent businesses of various sizes headquartered within the Sixth District, which encompasses Alabama, Florida, Georgia, and sections of Louisiana, Mississippi, and Tennessee. Panelists range from executives of large corporations to owner-operators of small businesses. The industry composition of the panel roughly reflects the makeup of the national economy. Nevertheless, survey responses are weighted by industry shares of national gross domestic product.”

An excerpt from the December 2020 BIE Survey dated December 16, 2020 (involving 204 firms responding):

  • Inflation expectations: Firms’ year-ahead inflation expectations have remained relatively unchanged at 2.0 percent, on average.
  • Current economic environment: Sales levels and profit margins “compared to normal” improved over the month and are near average levels. Year-over-year unit cost growth increased significantly to 1.7 percent, on average.
  • Quarterly question: Firms’ long-term (per year, over the next five to 10 years) inflation expectations increased significantly to 2.7 percent, on average.
  • Special question: Firms assessed how the price of their major product/product line or service changed over the last year. They then indicated how they expect the price to change over the next year and what their biggest concerns are for 2021. A breakdown of the results can be found in the special question section below.

The report also includes other questions and a variety of charts and tables depicting respondents’ answers.

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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.

Overall Q3 2020 Corporate Profits Relative To GDP

In the last post (“3rd Quarter 2020 Corporate Profits“) 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 still at levels that can be seen as historically 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 After Tax as a Percentage of GDP .10052

Data Source: FRED, Federal Reserve Economic Data, Federal Reserve Bank of St. Louis; accessed November 25, 2020

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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.

After-Tax Corporate Profits Chart 3rd Quarter 2020

Today’s (November 25, 2020) GDP release (Q3 2020, Second Estimate) was accompanied by the Bureau of Economic Analysis (BEA) Corporate Profits report (preliminary estimate) for the 3rd 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 November 25, 2020, with a value of $2126.656 Billion SAAR):

Corporate Profits After Tax (CP)

Here is the Corporate Profits After Tax measure shown on a Percentage Change from a Year Ago perspective (value of 10.7%):

Corporate Profits (CP) 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 November 25, 2020; 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.

S&P500 Earnings Trends – November 2020

S&P500 earnings trends and estimates are 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” report of November 13, 2020:

from page 23:

(click on charts to enlarge images)

S&P500 EPS forecasts 2020 & 2021

from page 24:

S&P500 EPS 2010-2021

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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.