Corporate earnings are also referred to as “company earnings” and “corporate profits:” basically, the amount of money a company makes in certain period of time. The price/earnings multiple is still the most common tool used to value a company. The stock market values a company based on the amount of money—the earnings and profits—the company has after all expenses, including taxes, have been paid. In a stock market where stocks are traded at an average of 12 times earnings, a company making $1.00 a share per year would be valued at $12.00. All things being equal, the more money a public company makes, the higher its stock price.
As corporate earnings tumble in, equity market action has been more tuned to stronger oil prices. A number of companies have now reported, and the numbers aren’t that bad. It’s still in the early stages, of course, but so far, there have been a lot of good financials. Having said that, sales growth has been missing early this corporate earnings season…. Read More
With the first quarter of 2015 behind us, it’s corporate earnings reporting season. Unfortunately, we are expecting the biggest decline in public corporate earnings since 2009.
Corporate Earnings Expected to Decline
Corporate profits are the most basic reasons why key stock indices rise or fall. If earnings are rising, stocks usually rise…. Read More
One sector of the domestic economy that should continue to produce solid corporate earnings is transportation stocks.
Higher freight volumes, higher freight prices not affecting demand, and lower fuel prices are a solid combination that should boost the bottom line for airlines, freight companies, and railroads.
Similar industry dynamics continue among lodging and restaurant companies…. Read More
Going back to the lackluster corporate earnings from early reporters that I talked about in my last article, today, I’m taking a closer look at NIKE, Inc. (NKE)… Read More, which appears to be outperforming the market so far in 2015.
Current Economic and Stock Market Action
In the fourth quarter of 2014, corporate earnings didn’t particularly sway market sentiment.
Is it finally happening? Are investors coming to the realization that the stock market is fully valued as corporate earnings are declining and general economic conditions in the U.S. are deteriorating faster than at any time in the last five years? I believe the smart money figured this out long ago, but the masses will go down with the crash…. Read More