Total revenue for S&P 500 corporations has grown to $16.1 trillion on a cumulative basis over the past 12 months based on Q3 2023 data.
Annualized growth has slowed continuously since 4Q21 (7 consecutive quarters) when the highest annualized growth rate in 30 years was recorded at 17.4%.
By 3Q 2023, growth slowed to 5.1% YoY vs. 12.8% YoY in 3Q 2022, and when adjusted for official inflation, revenue growth in real terms was less than 2% YoY.
Since 4Q19, revenue has grown 32% on a nominal basis, while the GDP price index has grown 17.5%, so over 4 years, revenue has grown 12.3% in real terms.
Earnings per Share (EPS) Analysis
The companies have conducted share buybacks during this time, so we can provide a comparison of EPS separately for each quarter (the above is a comparison of all earnings for the year):
EPS for the year was up 5.1%, a two-year increase of 18.7% (during which time the market was forming an all-time high), relative to Q3 2019 growth of 32.1% at par.
Over the previous four-year period (3Q 2019 to 3Q 2015), nominal earnings growth was 25.1% with inflation of 7.3% (16.6% growth in real terms).
From 3Q 2015 to 3Q 2019, nominal earnings per share grew by just 6.7% at 6.5% inflation, i.e., inflation-adjusted at zero.
The results are strong, but the main contributor to growth from 2020 is the success of the technology segment (which we will discuss separately).
Profit Margins
Knowing net income, we can calculate the net profit margin, which has fallen from a record 13% in Q4 2021 to 10 - 10.5% currently.
Surprisingly, despite rising costs (salaries, raw materials, intermediate products), margins in 2023 are on par with their best pre-recession levels, with the average margin from 2011 to 2019 being 9.1%.
Overall, margins are strongly influenced by technology companies, whose positive contribution is approaching 2 percentage points from 2019.
Conclusion
In summary, S&P 500 corporations have seen significant revenue growth, though it has slowed in recent quarters. Share buybacks have boosted earnings per share, with technology companies driving much of the growth. Despite rising costs, profit margins remain robust and, in some cases, even exceed pre-recession levels. This analysis reflects the adaptability and resilience of these corporations in a changing economic landscape.