Corporate profits

Corporate earnings remained strong in the first quarter

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By Robert Hughes

company profit

Refinitiv Data Stream

U.S. corporate profits before taxes and excluding adjustments for capital consumption and inventory valuation hit a record high of $3.192.5 billion at a seasonally adjusted annual rate in the first quarter, the National shows. Income and Product Accounts from the US Bureau of Economic Analysis (see first chart). That’s an increase of 2.7% from the fourth quarter and 17.7% from a year ago.

U.S. corporate profits after taxes and excluding adjustments for capital consumption and inventory valuation hit a record high of $2,740.1 billion, up 1.5% from the fourth quarter and 15. 7% compared to a year ago (see the first graph). Despite a tight labor market and rising input costs, companies were able to generate record levels of profits.

The national accounts measures of income and revenue are confirmed by the strong performance of earnings per share (EPS) for the Standard and Poor’s 500. Earnings per share (EPS) on a twelve-month weighted average basis was 210.30 $ through the end of March and $212.70 through the end of April (see the first chart). This is a gain of 38.6% over the level a year ago.

S&P500

Refinitiv Data Stream

Moreover, S&P 500 profit margins also remain at a high level. Trailing 12-month weighted average EPS as a percentage of trailing 12-month weighted average sales per share (SPS) held above 13% in 2022 (see second chart). It appears that companies are able to pass enough of their higher costs onto consumers to maintain strong profit margins.

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