Dr Edward Yardeni5169727683eyardeniyardenicomDebbie Johnson4806641333djohnsonyardenicomPlease visit our sites atwwwyardenicomblogyardenicom Table Of Contents Profits12Profits NIPA38Pr ID: 852216
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1 Corporate Finance Briefing:NIPA vs. S&P
Corporate Finance Briefing:NIPA vs. S&P 500Profits Dr. Edward Yardeni516-972-7683eyardeni@yardeni.comDebbie Johnson480-664-1333djohnson@yardeni.comPlease visit our sites atwww.yardeni.comblog.yardeni.com Table Of Contents Profits1-2Profits (NIPA)3-8Profits (NIPA vs. S&P)9Retained Earnings & Dividends10Cash Flow11Profit Margin12-16 606264666870727476788082848688909294969800020406081012141618202224 7510752075307540755075607570758075 7510752075307540755075607570758075 (1960=100, ratio scale) Nominal GNP 7% Growth Path*After-Tax Corporate Profits Reported to IRS *Compounded monthly to yield 7% annually.**Including Inventory Valuation Adjustm
2 ent (IVA) and Capital Consumption Adjust
ent (IVA) and Capital Consumption Adjustment (CCAdj), which restate the historical cost Figure 1. 606264666870727476788082848688909294969800020406081012141618202224 353103153203253303 353103153203253303 (dollars, ratio scale)S&P 500 Earnings Per Share* Reported(4-quarter sum) Operating** *Growth paths are compounded monthly to yield 5% and 7% annually.**Excludes write-offs.***S&P 500 12-month forward consensus expected operating earnings per share. Time-weighted average of consensus earnings estima Figure 2.June 18, 2021 / NIPA vs. S&P 500 Profits www.yardeni.comYardeni Research, Inc. 606264666870727476788082848688909294969800020406081
3 012141618202224 751075207530754075507560
012141618202224 7510752075307540755075607570758075 7510752075307540755075607570758075 (1960=100, ratio scale) 7% Growth Path*After-Tax Corporate Profits Reported to IRS *Compounded monthly to yield 7% annually.**Including Inventory Valuation Adjustment (IVA) and Capital Consumption Adjustment (CCAdj), which restate the historical cost Figure 3. 7981838587899193959799010305070911131517192123 105090130170210250290 105090130170210250290 & 7% Growth Trend(ratio scale) *52-week forward consensus expected S&P 500 operating earnings per share. Monthly through April 1994, then weekly.**Compounded monthly to yield 7% annually. Figure 4.June 18,
4 2021 / NIPA vs. S&P 500 Profits www.yar
2021 / NIPA vs. S&P 500 Profits www.yardeni.comYardeni Research, Inc. 485052545658606264666870727476788082848688909294969800020406081012141618202224 1041081012101610201024102810 1041081012101610201024102810 (billion dollars, saar, ratio scale)Total Profits Pre-Tax *Including Inventory Valuation Adjustment (IVA) and Capital Consumption Adjustment (CCAdj), which restate the historical cost b Figure 5. 485052545658606264666870727476788082848688909294969800020406081012141618202224 1051010101510201025103010 1051010101510201025103010 (billion dollars, saar, ratio scale)Total Profits Pre-Tax *Excluding Inventory Valuation Adjustment (IVA) and
5 Capital Consumption Adjustment (CCAdj),
Capital Consumption Adjustment (CCAdj), which restate the historical cost b Figure 6.June 18, 2021 / NIPA vs. S&P 500 Profits www.yardeni.comYardeni Research, Inc. 485052545658606264666870727476788082848688909294969800020406081012141618202224 -500 -50050100 (yearly percent change)Total Profits *Including Inventory Valuation Adjustment (IVA) and Capital Consumption Adjustment (CCAdj), which restate the historical cost b Figure 7. 485052545658606264666870727476788082848688909294969800020406081012141618202224 -60-40120140 -60020100120140 (yearly percent change)Total Profits *Excluding Inventory Valuation Adjustment (IVA) and Capital Consum
6 ption Adjustment (CCAdj), which restate
ption Adjustment (CCAdj), which restate the historical cost b Figure 8.June 18, 2021 / NIPA vs. S&P 500 Profits www.yardeni.comYardeni Research, Inc. 606264666870727476788082848688909294969800020406081012141618202224 -2000 -20002001000 (billion dollars, saar)Pre-Tax By Industry Financial Nonfinancial *Including Inventory Valuation Adjustment (IVA) and Capital Consumption Adjustment (CCAdj), which restate the historical cost b Figure 9. 606264666870727476788082848688909294969800020406081012141618202224 -200 -20020100 (as a percent of corporate profits)Pre-Tax By Industry Financial Nonfinancial *Including Inventory Valuation Adjustment (I
7 VA) and Capital Consumption Adjustment (
VA) and Capital Consumption Adjustment (CCAdj), which restate the historical cost b Figure 10.June 18, 2021 / NIPA vs. S&P 500 Profits www.yardeni.comYardeni Research, Inc. 85868788899091929394959697989900010203040506070809101112131415161718192021222324 -150-100 -150-50050100 (billion dollars) Pre-Tax Profits: Financial*(saar) S&P 500 Financials *Including Inventory Valuation Adjustment (IVA) and Capital Consumption Adjustment (CCAdj), which restate the historical cost b Figure 11. 8586878889909192939495969798990001020304050607080910111213141516171819202122 -15-10-5 -15-10-5010 Financial Profits as a Percent of Pre-Tax Corporate Profits
8 *Using consensus 12-month forward earni
*Using consensus 12-month forward earnings forecasts. Figure 12.June 18, 2021 / NIPA vs. S&P 500 Profits www.yardeni.comYardeni Research, Inc. 95969798990001020304050607080910111213141516171819202122 -500 -50050100 (billion dollars, saar)Rest of World Profits Receipts Payments *Including Inventory Valuation Adjustment (IVA) and Capital Consumption Adjustment (CCAdj), which restate the historical cost b Figure 13. 606264666870727476788082848688909294969800020406081012141618202224 -501015202530354045505560 -501015202530354045505560 (as a percent of pre-tax corporate profits*)Rest of World Profits Net (18.5) Payments (17.6) *Including Inv
9 entory Valuation Adjustment (IVA) and Ca
entory Valuation Adjustment (IVA) and Capital Consumption Adjustment (CCAdj), which restate the historical cost b Figure 14.June 18, 2021 / NIPA vs. S&P 500 Profits www.yardeni.comYardeni Research, Inc. Figure 15. 95969798990001020304050607080910111213141516171819202122 -30-20 -60020 GLOBAL INDUSTRIAL PRODUCTION(yearly percent change)OECD Industrial ProductionReceipts* 95969798990001020304050607080910111213141516171819202122 -40-30 -40010 WORLD vs. US MERCHANDISE EXPORTS(yearly percent change) Exports Receipts* 95969798990001020304050607080910111213141516171819202122 -30-20 -80-70010 WORLD vs. TRADE WEIGHTED DOLLAR(yearly percent change
10 )Trade Weighted DollarROW Profits Receip
)Trade Weighted DollarROW Profits Receipts* basis used in profits tax accounting for inventory withdrawals and depreciation to the current cost measures used in GDP. Source: Bureau of Economic Analysis and Board of Governors of the Federal Reserve System, Census Bureau and OECD.yardeni.com June 18, 2021 / NIPA vs. S&P 500 Profits www.yardeni.comYardeni Research, Inc. 70727476788082848688909294969800020406081012141618202224 -1000-800-400-200200400800100014001600200022002400 -1000-800-400-2000200400800100014001600200022002400 (billion dollars, quarterly)NIPA After-Tax Profits(saar) Based on Tax Returns* From Current Production**S&P 500Net
11 Income(actual x 4, nsa) Operating (S&P
Income(actual x 4, nsa) Operating (S&P data) *Excluding IVA & CCadj.**Including IVA & CCadj. These two adjustments restate the historical cost basis used in profits tax accounting for inventory w Figure 16. 959697989900010203040506070809101112131415161718192021222324 -25-20 -25-5010 (dollars, quarterly) Operating (S&P data) (47.4) Reported (S&P data) (46.1)Source: Standard & Poors.yardeni.com Figure 17.June 18, 2021 / NIPA vs. S&P 500 Profits www.yardeni.comYardeni Research, Inc. 606264666870727476788082848688909294969800020406081012141618202224 102104106108101010 102104106108101010 (billion dollars, saar, ratio scale)Source: Bureau o
12 f Economic Analysis.yardeni.com Figure 1
f Economic Analysis.yardeni.com Figure 18. 606264666870727476788082848688909294969800020406081012141618202224 10310610910121015101810 10310610910121015101810 (billion dollars, saar, ratio scale)Source: Bureau of Economic Analysis.yardeni.com Figure 19.June 18, 2021 / NIPA vs. S&P 500 Profits www.yardeni.comYardeni Research, Inc. 606264666870727476788082848688909294969800020406081012141618202224 206201220182024203020 206201220182024203020 (billion dollars, saar ratio scale) *After-tax undistributed corporate profits with IVA plus capital consumption allowance (i.e., tax-reported deprecation), which **Consumption of fixed capital.***Capit
13 al consumption allowance (i.e., tax-repo
al consumption allowance (i.e., tax-reported depreciation). CorporateCash Flow* (2588.7)yardeni.com Figure 20. -300 -4000100 (billion dollars, saar) 70727476788082848688909294969800020406081012141618202224 -250-150 -250-5050150 (billion dollars, saar) *Inventory Valuation Adjustment (IVA) and Capital Consumption Adjustment (CCAdj), which restate the historical cost basis Figure 21.June 18, 2021 / NIPA vs. S&P 500 Profits www.yardeni.comYardeni Research, Inc. 485052545658606264666870727476788082848688909294969800020406081012141618202224 68 610 *Includes IVA & CCAdj. These two adjustments restate the historical-cost basis used in profits
14 tax accounting for inventory wit Figure
tax accounting for inventory wit Figure 22. 485052545658606264666870727476788082848688909294969800020406081012141618202224 24 210 (after-tax profits as a percent of nominal GDP) yardeni.comAfter-Tax Profits Margins Using Book Profits* (9.9) *Tax-accounting basis as reported to IRS.**Book profits including Inventory Valuation Adjustment (IVA) and Capital Consumption Adjustment (CCAdj), which restate the his Figure 23.June 18, 2021 / NIPA vs. S&P 500 Profits www.yardeni.comYardeni Research, Inc. 485052545658606264666870727476788082848688909294969800020406081012141618202224 23568911121415171819 2356891011121415171819 (percent) *After-tax p
15 rofits including Inventory Valuation Adj
rofits including Inventory Valuation Adjustment (IVA) and Capital Consumption Adjustment (CCAdj) divided by Gross V Figure 24. 485052545658606264666870727476788082848688909294969800020406081012141618202224 6065 2410 & CAPACITY UTILIZATION Capacity Utilization: All Industries yardeni.com Figure 25.June 18, 2021 / NIPA vs. S&P 500 Profits www.yardeni.comYardeni Research, Inc. 656769717375777981838587899193959799010305070911131517192123 104108101210161020102410 104108101210161020102410 (billion dollars, quarterly, ratio scale)After-Tax Profits NIPA Book Profits* *NIPA book profits series excludes Inventory Valuation Adjustment and Capital
16 Consumption Adjustment. Series is season
Consumption Adjustment. Series is seasonally adju**S&P 500 aggregate net income on GAAP basis using four-quarter sum. Figure 26. 65676971737577798183858789919395979901030507091113151719212325 05 010100 (as a percent of NIPA after-tax book profits*) *S&P 500 aggregate reported net income is on GAAP basis and shown as four-quarter sum. NIPA book profits exclude Inventory Valu Figure 27.June 18, 2021 / NIPA vs. S&P 500 Profits www.yardeni.comYardeni Research, Inc. 48505254565860626466687072747678808284868890929496980002040608101214161820222426 02 010 ( without IVA & CCAdj) Corporate Profits After Tax* *After-tax profits as reported to IRS
17 excluding Inventory Valuation Adjustment
excluding Inventory Valuation Adjustment (IVA) and Capital Consumption Adjustment (CCAdj) Figure 28. 485052545658606264666870727476788082848688909294969800020406081012141618202224 24 6065 Private Fixed InvestmentCorporate Profits After Tax*(as a percent of nominal GDP) *After-tax profits as reported to IRS (without IVA and CCAdj). Figure 29.June 18, 2021 / NIPA vs. S&P 500 Profits www.yardeni.comYardeni Research, Inc. 485052545658606264666870727476788082848688909294969800020406081012141618202224 6065 60 (as a percent of nominal GDP) Source: Bureau of Economic Analysis.Note: Shaded areas denote recessions according to the National Bureau
18 of Economic Research.yardeni.com Figure
of Economic Research.yardeni.com Figure 30. 485052545658606264666870727476788082848688909294969800020406081012141618202224 5254 52 (as a percent of nominal GDP) Source: US Department of Commerce, Bureau of Economic Analysis.Note: Shaded areas denote recessions according to the National Bureau of Economic Research.yardeni.com Figure 31.June 18, 2021 / NIPA vs. S&P 500 Profits www.yardeni.comYardeni Research, Inc. http://blog.yardeni.comhttp://blog.yardeni.comrequests@yardeni.comCopyright (c) Yardeni Research, Inc. 2021. All rights reserved. The informationcontained herein has been obtained from sources believed to be reliable, but is no
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