Profitability Issues

After-Tax Corporate Profits Chart 2nd Quarter 2023

Today’s (August 30, 2023) GDP release (Q2 2023, Se cond Estimate) was accompanied by the Bureau of Economic Analysis (BEA) Corporate Profits report (Preliminary Estimate) for the 2nd 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 August 30, 2023 with a value of $2755.552 Billion SAAR):

–

Here is the Corporate Profits After Tax measure shown on a Percentage Change from a Year Ago perspective (value of -9.4%):

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 August 30, 2023; https://research.stlouisfed.org/fred2/series/CP

_____

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.

Firms’ Inflation Expectations And Impact Of Interest Rates

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 August 2023 BIE Survey dated August 16, 2023 (involving 202 firms responding):

Inflation expectations: Firms’ year-ahead inflation expectations significantly decreased to 2.5 percent, on average.
Current economic environment: Sales levels “compared to normal” increased. However, firms’ profit margins “compared to normal” decreased. Year-over-year unit cost growth remained relatively unchanged at 3.3 percent, on average.
Quarterly question: Approximately 78 percent of firms expect both labor and nonlabor costs to place upward influence on prices. About 50 percent of firms expect sales levels to exert little or no influence on prices over the next 12 months. Approximately 53 percent of firms expect margin adjustment to have little or no influence on prices over the next 12 months.
Special question: Firms were asked about the impact of interest rates increases on their businesses’ capital expenditure and labor decisions. 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.

_____

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.

S&P500 Earnings Trends – August 2023

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 August 4, 2023:

from page 28:

(click on charts to enlarge images)

from page 29:

_____

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.

—–

S&P500 EPS Estimates For 2023 – 2025 As Of August 2, 2023

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

The following estimates are from Exhibit 24 of the “S&P500 Earnings Scorecard” (pdf) of August 2, 2023, and represent an aggregation of individual S&P500 component “bottom up” analyst forecasts. For reference, the Year 2014 value is $118.78/share; the Year 2015 value is $117.46/share; the Year 2016 value is $118.10/share; the Year 2017 value is $132.00/share; the Year 2018 value is $161.93/share; the Year 2019 value is $162.93/share; the Year 2020 value is $139.72/share; the year 2021 value is $208.12/share; and the year 2022 value is $218.09/share:

Year 2023 estimate:

$218.51/share

Year 2024 estimate:

$245.60/share

Year 2025 estimate:

$274.64/share

_____

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.

—–

S&P500 EPS Forecasts From Standard & Poor’s August 9, 2023

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 August 9, 2023:

Year 2023 estimates add to the following:

-From a “bottom up” perspective, operating earnings of $219.42/share

-From a “bottom up” perspective, “as reported” earnings of $200.48/share

Year 2024 estimates add to the following:

-From a “bottom up” perspective, operating earnings of $244.06/share

-From a “bottom up” perspective, “as reported” earnings of $222.15/share

_____

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.

—–