In June, the last companies from S&P 500 reported for the first quarter. This is what happened to their profits now and this is how it was on average over ten years:
- Better than expectations: now - 77%, average - 72% companies.
- Worse than expectations: now - 20%, average - 20% companies.
- At the level of expectations: now - 3%, average - 8% companies.
Here's how S's revenue and profit have changed&P 500 and its individual sectors.
Revenue
Compared to the first quarter of 2021, aggregate sales of companies from the S&P 500 up by 13,6%. Excellent result, but there is a nuance - this is a high level of inflation.
Over the year, prices for goods and services in the US officially increased by 8-9%. And that means, what are the real sales of companies, that is, net of inflation, increased much less.
And for some, it's a problem.: not all companies can raise their prices quickly. For example, these are sellers of goods of second necessity. Here, sales growth was one of the weakest - an average of 8-9%, that is, at the level of inflation. As a result, profits and margins of companies fell, but more on that later.
But in the oil and gas sector, the situation is reversed.: here revenue increased the most - by 56,1%. Over the year, Brent crude oil has risen in price by 45%, which had a good effect on the incomes of oil workers.
Sales in the raw materials sector also grew significantly, which is now being pulled by fertilizer producers, - on 26%.
Quarterly revenue of sectors compared to last year
| Oil & Gas | +56,1% |
| Raw materials | +26,0% |
| The property | +16,9% |
| Industry | +16,0% |
| healthcare | +13,8% |
| S&P 500 | +13,6% |
| Technologies | +12,1% |
| Utilities | +11,4% |
| Essential goods | +9,5% |
| Goods of second necessity | +8,6% |
| Communications | +8,1% |
| Finance | −0,6% |
+56,1%
Profit
Year-on-year total operating profit S&P 500 rose by 4,2% – the worst result in the last three years, except for the collapse during the coronacrisis. Probably, rapid profit growth, which happened in 2020-2021, is a thing of the past.
Despite the overall positive dynamics, profits in some sectors fell. For example, it's utilities, Communications and Finance. But the main loser is still the same – goods of second necessity.. The sector lost in profit immediately 41%.
The oil and gas and raw materials sectors increased the most profits - plus 324.4 and 55,3%.
Quarterly profit of sectors compared to last year
| Oil & Gas | +324,4% |
| Raw materials | +55,3% |
| The property | +37,6% |
| Industry | +33,6% |
| Technologies | +17,0% |
| Essential goods | +7,8% |
| healthcare | +7,6% |
| S&P 500 | +4,2% |
| Utilities | −1,3% |
| Communications | −10,0% |
| Finance | −27,2% |
| Goods of second necessity | −41,0% |
+324,4%
Profitability
Due to rising gasoline costs, raw material, Labor, logistics and other operating margin S&P 500 decreased from 13 to 11,9%. And that means, that the cost of production of goods has increased more, than revenue.
The inability of companies from some sectors to shift costs to the buyer led to a decline in profitability.. First of all, these are cyclical sectors: all the same communications, finance, goods of second necessity.
But there is good news.: current margin S&The P 500 is still above the historical level in 10%. The margin of safety of the index still remains, although the situation varies from sector to sector.
Quarterly sector margin compared to last year
| Oil & Gas | 4,0 → 11,0% |
| The property | 17,9 → 21,0% |
| Raw materials | 11,0 → 13,6% |
| Industry | 6,8 → 7,8% |
| Technologies | 22,0 → 23,0% |
| Essential goods | 7,2 → 7,1% |
| healthcare | 10,0 → 9,4% |
| S&P 500 | 13,0 → 11,9% |
| Utilities | 14,6 → 12,9% |
| Communications | 19,2 → 16,0% |
| Goods of second necessity | 7,9 → 4,3% |
| Finance | 24,4 → 17,9% |
4,0 → 11,0%
New Reporting Season
Short-term stock price is affected by a variety of things: macrostatistics, experts' forecasts, geopolitics and so on. At a long distance, the value of shares determines the dynamics of profit..
According to the forecast, Profit S&P 500 year-on-year in the second quarter will grow by 5,9%, and by the end of 2022 — on 7,8%. Good prognosis, but he, seems, does not take into account the possible downturn in the US economy.
Season of Reports for the second quarter will begin soon, in mid-July. Company results and executive statements will show, how business copes with the main problems today: high inflation, tough politics FED and weak consumer activity.
