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S&P 500 reports a year-on-year decrease in net profit margin for the fourth consecutive quarter – Investment Observation

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For the fourth quarter, the S&P 500 reports an annual decrease in earnings of -2.1%, but an annual revenue growth of 2.7%. Given the dichotomy in the growth between earnings and income, there are concerns in the market about the net profit margins for S&P 500 companies in the fourth quarter. Given this concern, what does the S&P 500 report for a net profit margin in the fourth quarter?


The combined net profit margin for the S&P 500 for the fourth quarter of 2019 is 10.7%. If 10.7% is the real net profit margin for the quarter, it will be the first time that the index reports four consecutive quarters of year-on-year falls in the net profit margin from the fourth quarter of 2008 to the third quarter of 2009. Eight of The 11 sectors are reporting a year-on-year decrease in their net profit margins in the fourth quarter of 2019, led by Energy (4.7% vs. 7.4%), Information Technology (21.4% vs. 22.7%) and Discretionary consumer (5.9% vs. 7.0%) sectors.

Net profit margins of S&P 500 NEW

S&P 500 Estimated net profit margins at sector level

What is driving the decline year after year in the net profit margin?


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