As stated in the “Businesses In A Weak Economy” page:
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.
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 is a management consulting firm and strategic advisory that focuses on the analysis of current and future weak(ening) economic conditions, and offers businesses and other entities advice, strategies, and actionable methods on how to optimally adapt to such challenging, complex conditions.