Yesterday (October 21) Morningstar had an article titled “Are Earnings Coming Back To Earth?” that contained various notable commentary with regard to corporate profits, as well as two long-term charts of US Corporate Profits.
A couple of notable excerpts include:
So far in this third-quarter earnings season, we’ve seen disappointing top-line numbers that could be a sign that the momentum in corporate earnings might be beginning to slow.
According to data from FactSet, of the 98 members of the S&P 500 that have reported earnings so far, 70% have exceeded analyst expectations. But of those 98 firms, only 42% have beaten estimates for sales.
Given that most firms have already cut about as much as they can from their organizations, the drop in sales is likely to eventually lead to a drop in profit as it will be harder to cut deeper to keep profit growing.
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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.