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
Top Five Companies % of S&P 500 Market Capitalization The S&P 500 is experiencing unprecedented levels of concentration. While the concentration presents potential risks, the fundamentals of the top 5 companies remain strong, with elevated profit margins and robust cash flow generation. Image: Deutsche Bank
S&P 500 Aggregate EPS Surprise Corporate America has once again demonstrated its ability to sustain profit margins, with a strong Q4 2024 earnings season surpassing expectations by a significant margin. Image: Morgan Stanley Research
S&P 500 Earnings Estimates The Magnificent Five are positioned for strong earnings growth through 2025, driven by superior sales growth, robust profit margins, and reasonable valuations relative to their growth potential. Image: Goldman Sachs Global Investment Research
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