Global Nominal GDP and Corporate Profits This chart shows the correlation and the slowdown in global growth and corporate profits. Historically, margin pressures have preceded the start of recessions. Image: J.P. Morgan
S&P 500 EPS Beat vs. Consensus Estimate Since 2000 Corporate America’s ability to maintain profit margins was again demonstrated by a robust 1Q 2023 earnings report, beating expectations by a wide margin. Image: BofA US Equity & Quant Strategy
Inflation – Single Most Important Problem Facing Small Business Owners Inflation is supposed to reduce profit margins. Image: BCA Research
Valuation – S&P 500 Operating Earnings Per Share If companies are able to maintain their profit margins, the forward P/E ratio of the S&P 500 could fall to 20.1x by 4Q22. Image: J.P. Morgan Asset Management
S&P 500 Sectors’ Relative Performance Sensitivity to Real Rates Can higher rates boost financials by increasing profit margins? Image: BofA US Equity & Quant Strategy
S&P 500 Sectors’ Relative Performance Sensitivity to Real Rates Financials benefit from higher rates, as profit margins expand. Image: BofA Global Research
S&P 500 Industrials Index and U.S. Manufacturing Unit Labor Costs When U.S. labor costs rise, industrial profit margins are under pressure. Image: Quill Intelligence, LLC
Top 5 vs. S&P 500 ex-Top 5 – YoY Contribution of EPS and P/E to Returns The performance gap could widen further, as the top 5 largest stocks in the S&P 500 are superior on almost every financial metric (revenue, profit growth, margin structure, volatility and corporate leverage). Image: Credit Suisse Research