You Need to Increase the Top Line to Sustain the Bottom Line

Posted by: Howard Silverblatt on August 13, 2009

S&P 500 Q2 sales are off 24.82% Y/Y or $597B; 1-year is off 13.24% or $1.27T
Industrials posted their worst 12-month percentage drop since our record started in 1964, -9.03%
For reported issues only:
Operating Margins at 6.6%, with Financials at 2.7% and Industrials (old) at 7.3%
As Reported flat at 4.9%
click here

Sales deteriorated significantly during the quarter, with damage to margins minimized by higher productivity - those of us that worked, worked a lot harder. S&P 500 sales for the quarter posted their third consecutive double-digit year-over-year decline, with the 12-month decline at -13.2%. Consumer Staple sales for the quarter were slightly down, Financials and Health Care were slightly up, Information Technology was off 12%, and Energy dropped 46%. Industrial sales over the last 4-quarters posted their worst decline (-9%) since our records started in 1964.

If companies can increase sales, high margins (from their cost cutting), should enhance profits. Consumer and corporate spending remains key. Once the storm is over, companies may try to use all that built-up cash (near record for Q2) via M&A, to increase their sales.

http://www2.standardandpoors.com/spf/xls/index/SP500EPSEST.XLS

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Bloomberg Businessweek’s Ben Steverman focuses on the latest moves in financial markets and emerging trends in stocks, bonds, and funds, always with an eye toward giving readers a better understanding of the sometimes confusing and often chaotic world of money. Standard & Poor’s senior index analyst Howard Silverblatt will also provide his take on companies’ finances and the markets. Voted one of the “Top 100 Finance Blogs” in 2007.

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