SP 500 Margin

Stock Market Briefing:
S&P 500 Sectors & Industries

Profit Margins
Yardeni Research, Inc.
December 7, 2016
Dr. Edward Yardeni

516-972-7683
eyardeni@yardeni.com
Joe Abbott
732-497-5306
jabbott@yardeni.com
Please visit our sites at

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thinking outside the box
Table Of Contents
Table Of Contents
S&P 500 Operating Profit Margins

S&P 500 Profit Margin
S&P 500 Sectors Operating Profit Margins
S&P 500 Sectors Forecasted & Actual Profit Margins
Consumer Discretionary
Consumer Staples
Energy
Health Care
Industrials
Information Technology
Materials
Materials & Telecommunication Services
December 7, 2016 / Stock Market Briefing: S&P 500 Sectors & Industries Profit Margins
3-6
7
8
5-6
7
8
9
10
11
12
13
Yardeni Research, Inc.

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Figure 1.
12
12
S&P 500 PROFIT MARGIN
Q3
(percent, quarterly)
9
-3
-3
Operating (10.7)
-6
-6
Reported (8.8)
-9
-9
yardeni.com
-12
94
95
96
97
98
99
00
01
02
03
04
05
06
07
08
09
10
11
12
13
14
15
16
17
-12
18
Source: Standard & Poors Corporation (revenues and reported EPS) and Thomson Reuters I/B/E/S (operating EPS).
Figure 2.
11
10
11
Q3
(percent, trailing four-quarter average)
10
Operating (10.3)
Reported (7.8)
1
yardeni.com
0
94
95
96
97
98
99
00
01
02
03
04
05
06
07
08
09
10
11
12
13
14
15
16
17
18
Source: Standard & Poors Corporation (revenues and reported EPS) and Thomson Reuters I/B/E/S (operating EPS).
Page 3 / December 7, 2016 / Stock Market Briefing: S&P 500 Sectors & Industries Profit MarginsYardeni
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Figure 3.
12
12
S&P 500 OPERATING PROFIT MARGIN

(percent)
Q3
10
10
Quarterly (10.7)
Trailing four-quarter
average (10.3)
yardeni.com
2
94
95
96
97
98
99
00
01
02
03
04
05
06
07
08
09
10
11
12
13
14
15
16
17
18
Source: Standard & Poors Corporation.
Figure 4.
15
15
S&P 500 REPORTED PROFIT MARGIN

(percent)
10
10
Q3
Quarterly (8.8)
Trailing four-quarter
average (7.8)
-5
-5
-10
-10
yardeni.com
-15
92
93
94
95
96
97
98
99
00
01
02
03
04
05
06
07
08
09
10
11
12
13
14
15
16
17
-15
18
Source: Standard & Poors Corporation and Thomson Reuters I/B/E/S and Bureau of Economic Analysis.
Research, Inc.
www.yardeni.com

Figure 5.
12
(percent, using analysts average earnings and revenues forecasts)
12
17
16
18
11
11
12/1
10
10
Consensus Forecasts
Annual
7
52-week forward*
yardeni.com
6
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018
* Time-weighted average of the consensus estimates for current and next year. Monthly through December 2005, weekly thereafter.
Source: Thomson Reuters I/B/E/S.
I/B/E/S and Standard & Poors.
Figure 6.
11
11
S&P 500 PROFIT MARGIN MEASURES
12/1
(percent)
Q3
10
10
S&P 500 Operating Profit Margins

52-week forward*
Actual (trailing four-quarter average)

6
yardeni.com
2006
2007
5
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018
* Time-weighted average of consensus operating earnings estimates for current and next year.
Source: Thomson Reuters I/B/E/S and Standard & Poors Corporation.
Research, Inc.
www.yardeni.com

Figure 7.
11
2300
S&P 500 & PROFIT MARGIN
11/30
10
2100
Q3
S&P 500 index (2198.8)
1900
Operating trailing
4-quarter profit margin (9.9)
1700
1500
8
1300
1100
900
6
700
500
5
300
yardeni.com
4
93
94
95
96
97
98
99
00
01
02
03
04
05
06
07
08
09
10
11
12
13
14
15
16
17
100
18
Source: Standard & Poors Corporation and Thomson Reuters I/B/E/S.
Figure 8.
12
2400
S&P 500 & FORWARD PROFIT MARGIN
11
S&P 500 index (2198.8)
11/30
2200
Forward profit margin (10.7)
12/1
2000
10
1800
1600
9
1400
1200
1000
7
800
yardeni.com
6
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
600
2018
* Time-weighted average of the consensus estimates for current and next year. Monthly through December 2005, weekly thereafter.
Source: Standard & Poors Corporation and Thomson Reuters I/B/E/S.
Research, Inc.
www.yardeni.com
S&P 500 Sectors Operating Profit Margins

Figure 9.
14
12
CONSUMER DISCRETIONARY
Operating Profit Margin*
(trailing 4-quarter, %)
10
12
INDUSTRIALS
10
Q3
Q3
6
4
Sector (7.5)
S&P 500 (8.9)
2
0
95
12
97
99
01
03
05
07
09
11
13
15
17
19
CONSUMER STAPLES
(8.9)
4
95
97
99
01
03
05
07
09
11
13
15
17
19
20
INFORMATION TECHNOLOGY
Q3
10
17
14
11
8
Q3
(6.6)
(16.7)
2
95
12
97
99
01
03
05
07
09
11
13
15
17
19
ENERGY
95
97
99
01
03
05
07
09
11
13
15
17
19
12
MATERIALS
10
4
Q3
(-4.4)
-4
(5.9)
Q3
-8
0
95
18
16
97
99
01
03
05
07
09
11
13
15
17
19
FINANCIALS
95
97
99
01
03
05
07
09
11
13
15
17
19
14
TELECOMMUNICATION SERVICES
12
Q3
14
10
Q3
12
10
(14.5)
(9.6)
2
95
16
14
97
99
01
03
05
07
09
11
13
15
17
19
HEALTH CARE
95
97
99
01
03
05
07
09
11
13
15
17
19
12
UTILITIES
10
12
Q3
10
8
Q3
(8.4)
(9.0)
yardeni.com
4
95
97
99
01
03
05
07
09
11
13
15
17
19
95
97
99
01
03
05
07
09
11
13
15
17
19
* Operating margin in percent and based on trailing 4-quarter EPS and sales.
Source: Standard & Poors.
Research, Inc.
www.yardeni.com
S&P 500 Sectors Forecasted & Actual Profit Margins

Figure 10.
9
CONSUMER DISCRETIONARY
Q3
11
INDUSTRIALS
11/30
10
Q3
11/30
Operating Profit Margin*
Actual 4Q Trailing
Implied Forward
6
06
7.00
07
08
09
10
11
12
13
14
15
16
17
CONSUMER STAPLES
18
19
06
07
08
09
10
11
12
13
14
15
16
17
18
19
25
INFORMATION TECHNOLOGY
11/30
6.75
11/30
Q3
6.50
20
Q3
15
6.25
10
6.00
5.75
5
06
16
12
07
08
09
10
11
12
13
14
15
16
17
18
19
ENERGY
06
07
08
09
10
11
12
13
14
15
16
17
18
19
12
MATERIALS
11/30
10
8
11/30
Q3
4
Q3
-4
-8
0
06
20
07
08
09
10
11
12
13
14
15
16
17
18
19
FINANCIALS
06
07
08
09
10
11
12
13
14
15
16
17
18
19
16
TELECOMMUNICATION SERVICES
15
Q3
14
11/30
Q3
12
11/30
10
8
10
6
4
2
06
12
07
08
09
10
11
12
13
14
15
16
17
18
19
HEALTH CARE
06
07
08
09
10
11
12
13
14
15
16
17
UTILITIES
11
18
19
11.0
11/30
10.5
11/30
10.0
10
9.5
9
Q3
Q3
9.0
8.5
yardeni.com
7
06
07
08
09
10
11
12
13
14
15
16
17
18
19
06
07
08
09
10
11
12
13
14
15
16
17
18
8.0
19
* Actual from S&P based on trailing 4-quarter EPS and sales. Forecast implied from Thomson Reuters I/B/E/S consensus forward EPS
and sales, and pushed one year ahead.
Source: Standard & Poors Corporation (trailing 4-quarter margin) and Thomson Reuters I/B/E/S (forward margin).
Research, Inc.
www.yardeni.com
Figure 11.
20
20
S&P 500 OPERATING PROFIT MARGINS: CONSUMER DISCRETIONARY

(trailing 4-quarter EPS, percent)
15
15
10
10
Q3
Consumer Discretionary Sector (7.5)

Advertising (7.0)
Automobile Manufacturers (5.3)
-5
-5
Auto Parts & Equipment (7.7)

Publishing (3.4)
yardeni.com
-10
95
96
97
98
99
00
01
02
03
04
05
06
07
08
09
10
11
12
13
14
15
16
17
-10
18
Source: Standard & Poors Corporation, Thomson Reuters I/B/E/S, and Haver Analytics.
Figure 12.
18
18

16
14
Hotels, Resorts & Cruise Lines (9.8)
Casinos & Gaming (8.4)
Restaurants (13.8)
16
14
Movies & Entertainment (15.5)
12
12
10
10
Q3
2
yardeni.com
0
95
96
97
98
99
00
01
02
03
04
05
06
07
08
09
10
11
12
13
14
15
16
17
18
Research, Inc.
www.yardeni.com
Figure 13.
9

8
Q3
Apparel Retail (7.8)

Department Stores (4.4)
Specialty Stores (5.1)

yardeni.com
0
95
96
97
98
99
00
01
02
03
04
05
06
07
08
09
10
11
12
13
14
15
16
17
18
Figure 14.
20
20


Household Appliances (4.8)
15
15
Homebuilding (7.7)
Computer & Electronics Retail (2.9)
Home Improvement Retail (7.0)
10
10
Q3
0
Margins capped at -2%
due to extreme values.
yardeni.com
-5
95
96
97
98
99
00
01
02
03
04
05
06
07
08
09
10
11
12
13
14
15
16
17
-5
18
Research, Inc.
www.yardeni.com
Consumer Staples
Figure 15.
16
16
S&P 500 OPERATING PROFIT MARGINS: CONSUMER STAPLES

14
14
12
12
Consumer Staples Sector (6.6)

10
10
Household Products (14.0)

Packaged Foods & Meats (8.3)
Personal Products (7.7)
Q3
6
yardeni.com
4
95
96
97
98
99
00
01
02
03
04
05
06
07
08
09
10
11
12
13
14
15
16
17
18
Figure 16.
30
30
S&P 500 OPERATING PROFIT MARGINS: CONSUMER STAPLES

25
25
Consumer Staples Sector (6.6)

Brewers (18.5)
Drug Retail (4.0)
20
20
Soft Drinks (13.9)

Tobacco (27.1)
15
15
10
10
Q3
yardeni.com
0
95
96
97
98
99
00
01
02
03
04
05
06
07
08
09
10
11
12
13
14
15
16
17
18
Research, Inc.
www.yardeni.com
Energy
Figure 17.
12
10
12
S&P 500 OPERATING PROFIT MARGINS: ENERGY

10
-2
-2
Energy Sector (-4.4)

Integrated Oil & Gas (5.4)
-4
-4
Q3
Oil & Gas Refining & Marketing (4.8)
-6
-6
yardeni.com
-8
95
96
97
98
99
00
01
02
03
04
05
06
07
08
09
10
11
12
13
14
15
16
17
-8
18
Figure 18.
40
35
40
S&P 500 OPERATING PROFIT MARGINS: ENERGY

35
30
30
25
25
20
20
15
15
10
10
Energy Sector (-4.4)

0
Oil & Gas Drilling (14.7)

Oil & Gas Equipment & Services (6.4)
-5
Q3
-5
Oil & Gas Exploration & Production (-4.6)

yardeni.com
-10
95
96
97
98
99
00
01
02
03
04
05
06
07
08
09
10
11
12
13
14
15
16
17
-10
18
Research, Inc.
www.yardeni.com
Health Care
Figure 19.
45
45
S&P 500 OPERATING PROFIT MARGINS: HEALTH CARE

40
40
35
35
30
30
Health Care Sector (8.4)
25
25
Biotechnology (42.3)
Health Care Equipment (17.9)
20
20
Managed Health Care (3.9)
15
15
10
10
Q3
5
yardeni.com
0
95
96
97
98
99
00
01
02
03
04
05
06
07
08
09
10
11
12
13
14
15
16
17
18
Figure 20.
30
30
S&P 500 OPERATING PROFIT MARGINS: HEALTH CARE

25
25
20
20
15
Health Care Sector (8.4)
Pharmaceuticals (25.2)
Health Care Facilities (4.6)
Health Care Distributors (1.4)
15
10
10
Q3
yardeni.com
-5
95
96
97
98
99
00
01
02
03
04
05
06
07
08
09
10
11
12
13
14
15
16
17
-5
18
Research, Inc.
www.yardeni.com
Industrials
Figure 21.
14
14
S&P 500 OPERATING PROFIT MARGINS: INDUSTRIALS

12
12
10
10
Q3
Industrials Sector (8.9)
Industrial Conglomerates (12.0)

Industrial Machinery (9.8)
Construction Machinery
& Heavy Trucks (6.6)
yardeni.com
2
95
96
97
98
99
00
01
02
03
04
05
06
07
08
09
10
11
12
13
14
15
16
17
18
Figure 22.
12
12
S&P 500 OPERATING PROFIT MARGINS: INDUSTRIALS

11
11
Industrials Sector (8.9)

Aerospace & Defense (8.5)
10
10
Electrical Components
& Equipment (10.5)
Q3
4
yardeni.com
3
95
96
97
98
99
00
01
02
03
04
05
06
07
08
09
10
11
12
13
14
15
16
17
18
Page 10 / December 7, 2016 / Stock Market Briefing: S&P 500 Sectors & Industries Profit Margins
Yardeni
Research, Inc.
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Information Technology
Figure 23.
35
35
S&P 500 OPERATING PROFIT MARGINS: INFORMATION TECHNOLOGY

30
30
25
25
20
20
Q3
15
15
10
10
Information Technology Sector (16.7)

Application Software (15.5)
Data Processing & Outsourcing (18.5)
IT Consulting & Other Services (14.9)
Systems Software (25.5)
0
yardeni.com
-5
97
98
99
00
01
02
03
04
05
06
07
08
09
10
11
12
13
14
15
16
17
-5
18
Figure 24.
30
30
S&P 500 OPERATING PROFIT MARGINS: INFORMATION TECHNOLOGY

Information Technology Sector (16.7)
25
25
Communications Equipment (22.7)
20
20
Q3
15
15
10
10
-5
-5
Semiconductors (22.1)
Semiconductor Equipment (16.3)
yardeni.com
-10
97
98
99
00
01
02
03
04
05
06
07
08
09
10
11
12
13
14
15
16
17
-10
18
Yardeni
Research, Inc.
www.yardeni.com
Materials
Figure 25.
12
12
S&P 500 OPERATING PROFIT MARGINS: MATERIALS

10
10
Q3
Materials Sector (5.9)

Aluminum (2.8)
-2
-2
Paper Products (6.5)

Steel (3.4)
yardeni.com
-4
95
96
97
98
99
00
01
02
03
04
05
06
07
08
09
10
11
12
13
14
15
16
17
-4
18
Figure 26.
25
25

20
20
Diversified Chemicals (9.0)

Fertilizers & Agricultural Chemicals (14.8)
Industrial Gases (13.7)
15
15
Specialty Chemicals (11.0)
10
10
Q3
5
yardeni.com
0
95
96
97
98
99
00
01
02
03
04
05
06
07
08
09
10
11
12
13
14
15
16
17
18
Yardeni
Research, Inc.
www.yardeni.com
Materials & Telecommunication Services

Figure 27.
30
30

25
25
Gold (6.2)
Metal & Glass Containers (5.8)
20
20
Diversified Metals & Mining (-0.3)

Paper Packaging (6.8)
15
15
10
10
Q3
yardeni.com
-5
95
96
97
98
99
00
01
02
03
04
05
06
07
08
09
10
11
12
13
14
15
16
17
-5
18
Figure 28.
16
16
S&P 500 OPERATING PROFIT MARGINS: TELECOMMUNICATION SERVICES

Telecommunication Services Sector (9.6)
14
14
Integrated Telecommunication (11.1)
12
12
10
10
Q3
2
yardeni.com
0
95
96
97
98
99
00
01
02
03
04
05
06
07
08
09
10
11
12
13
14
15
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17
18
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Stock Market Briefing:

S&P 500 Sectors & Industries

Dr. Edward Yardeni

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thinking outside the box

S&P 500 Operating Profit Margins

Yardeni Research, Inc.

S&P 500 Profit Margin

S&P 500 PROFIT MARGIN

S&P 500 PROFIT MARGIN

(percent, trailing four-quarter average)

S&P 500 Profit Margin

S&P 500 OPERATING PROFIT MARGIN

Source: Standard & Poors Corporation.

S&P 500 REPORTED PROFIT MARGIN

S&P 500 Profit Margin

S&P 500 PROFIT MARGIN

(percent, using analysts average earnings and revenues forecasts)

S&P 500 PROFIT MARGIN MEASURES

S&P 500 Operating Profit Margins

Actual (trailing four-quarter average)

S&P 500 Profit Margin

S&P 500 & PROFIT MARGIN

S&P 500 index (2198.8)

Source: Standard & Poors Corporation and Thomson Reuters I/B/E/S.

S&P 500 & FORWARD PROFIT MARGIN

S&P 500 index (2198.8)

Forward profit margin (10.7)

S&P 500 Sectors Operating Profit Margins

S&P 500 Sectors Forecasted & Actual Profit Margins

Operating Profit Margin*

S&P 500 OPERATING PROFIT MARGINS: CONSUMER DISCRETIONARY

Consumer Discretionary Sector (7.5)

Auto Parts & Equipment (7.7)

S&P 500 OPERATING PROFIT MARGINS: CONSUMER DISCRETIONARY

Consumer Discretionary Sector (7.5)

Hotels, Resorts & Cruise Lines (9.8)

Casinos & Gaming (8.4)

Movies & Entertainment (15.5)

S&P 500 OPERATING PROFIT MARGINS: CONSUMER DISCRETIONARY

Consumer Discretionary Sector (7.5)

Apparel Retail (7.8)

Specialty Stores (5.1)

S&P 500 OPERATING PROFIT MARGINS: CONSUMER DISCRETIONARY

Consumer Discretionary Sector (7.5)

S&P 500 OPERATING PROFIT MARGINS: CONSUMER STAPLES

Consumer Staples Sector (6.6)

Household Products (14.0)

S&P 500 OPERATING PROFIT MARGINS: CONSUMER STAPLES

Consumer Staples Sector (6.6)

Soft Drinks (13.9)

S&P 500 OPERATING PROFIT MARGINS: ENERGY

Energy Sector (-4.4)

Oil & Gas Refining & Marketing (4.8)

S&P 500 OPERATING PROFIT MARGINS: ENERGY

Energy Sector (-4.4)

Oil & Gas Drilling (14.7)

Oil & Gas Exploration & Production (-4.6)

S&P 500 OPERATING PROFIT MARGINS: HEALTH CARE

Health Care Sector (8.4)

Managed Health Care (3.9)

S&P 500 OPERATING PROFIT MARGINS: HEALTH CARE

Health Care Sector (8.4)