• Now corporate profits are falling too...
Earnings-per-share for companies in the S&P 500 fell 16% during the second quarter, according to Standard & Poor’s. It was the biggest drop since 2009.
Last month, Reuters said investors should prepare for another ugly earnings season.
Forecasts for third-quarter S&P 500 earnings now call for a 3.9 percent decline from a year ago, based on Thomson Reuters data, with half of the S&P sectors estimated to post lower profits...
Expectations for future quarters are falling as well. A rolling 12-month forward earnings-per-share forecast now stands near negative 2 percent, the lowest since late 2009...
But even as earnings fall, large U.S. companies are still paying out record amounts of cash to shareholders, according to Bloomberg Business.
In the second quarter, the most creditworthy companies posted declining earnings before interest, taxes, depreciation and amortization. Yet they returned 35 percent of those earnings to shareholders, according to JPMorgan.
That’s kept their cash-payout ratio -- how much money they give to shareholders relative to Ebitda -- steady at a 15-year high.
• Falling profits are making it hard for companies to pay off debt…
In June, Fortune wrote:
According to credit rating agency Standard & Poor’s, 52 companies have defaulted on their debt in the first six months of this year. That’s more than double the number of companies that missed interest payments in the first half of 2014, and it’s close to eclipsing the 60 companies that defaulted in all of 2014. It is also the highest pace of defaults since 2009.
For many companies today, almost every dollar of earnings goes towards paying off debt. For example, the U.S. Energy Information Administration reports that onshore oil producers use 83 cents of every dollar they generate to pay debt. This has created a very fragile situation. The stocks of companies with big debts often fall the hardest during an economic slowdown.
This has created a very fragile situation. The stocks of companies with big debts often fall the hardest during an economic slowdown.
--Casey Daily Dispatch
Earnings-per-share for companies in the S&P 500 fell 16% during the second quarter, according to Standard & Poor’s. It was the biggest drop since 2009.
Last month, Reuters said investors should prepare for another ugly earnings season.
Forecasts for third-quarter S&P 500 earnings now call for a 3.9 percent decline from a year ago, based on Thomson Reuters data, with half of the S&P sectors estimated to post lower profits...
Expectations for future quarters are falling as well. A rolling 12-month forward earnings-per-share forecast now stands near negative 2 percent, the lowest since late 2009...
But even as earnings fall, large U.S. companies are still paying out record amounts of cash to shareholders, according to Bloomberg Business.
In the second quarter, the most creditworthy companies posted declining earnings before interest, taxes, depreciation and amortization. Yet they returned 35 percent of those earnings to shareholders, according to JPMorgan.
That’s kept their cash-payout ratio -- how much money they give to shareholders relative to Ebitda -- steady at a 15-year high.
• Falling profits are making it hard for companies to pay off debt…
In June, Fortune wrote:
According to credit rating agency Standard & Poor’s, 52 companies have defaulted on their debt in the first six months of this year. That’s more than double the number of companies that missed interest payments in the first half of 2014, and it’s close to eclipsing the 60 companies that defaulted in all of 2014. It is also the highest pace of defaults since 2009.
For many companies today, almost every dollar of earnings goes towards paying off debt. For example, the U.S. Energy Information Administration reports that onshore oil producers use 83 cents of every dollar they generate to pay debt. This has created a very fragile situation. The stocks of companies with big debts often fall the hardest during an economic slowdown.
This has created a very fragile situation. The stocks of companies with big debts often fall the hardest during an economic slowdown.
--Casey Daily Dispatch