Why Earnings Quality Matters
https://youtu.be/fK8sVzVFs84 Several news outlets have talked about the deterioration in the quality of corporate earnings. Most companies report on both a GAAP and Non-GAAP basis. We are seeing many companies (especially technology companies) pay more of their workers in the form of stock compensation, which can enhance reported (Non-GAAP) earnings. The value of a company […]
Earnings Matter
https://youtu.be/9izFBpIfw_Y Over the long run, earnings drive stock prices. When considering a stock, it is important to understand the company and how its earnings are generated. This is demonstrated by looking at the difference in earnings of two energy companies: Exxon Mobil and Energy Transfer. Today, operating margins for the S&P 500 are coming off […]
Corporate Profit Margins Squeezed
https://youtu.be/7Dz6xvK6xEU Walmart (WMT) and Target (TGT) earnings this week reflect the changing landscape for profit margins. Expenses are increasing (especially wages and freight costs) faster than companies can raise price. Thus, profit margins are coming down from historically high levels.
U.S. Corporate Profit Margins Going Down?
https://youtu.be/K4byF8rkGTwCorporate profit margins are at all-time highs. The stock market is also trading at all-time high levels. There are two items that could derail these levels: inflation and higher interest rates. Watch our video to learn more.
Are Corporate Profits Ready to Fall?
https://youtu.be/VsEg9QATsOY U.S. corporations have doubled their debt levels over the past 10 years to buy back shares. Today, profit margins are also nearing their highest levels going back to 1950. The high level of corporate debt along with higher costs of moving operations back to the United States should cause profit margins to normalize 25%-35% […]
US Stocks Disconnect from Earnings
When buying a stock, you are investing in the future of the company. Historically a stock price is highly correlated to earnings growth. If earnings grow, the stock increases and vice versa. What we have seen in the past decade is that many US large company stock prices have increased, but earnings have not kept […]