How Profitable Are American Companies?

Each quarter all of the publicly trade companies in the country report their profits. This is a closely watched, carefully measured exercise, that is vital to the workings of the financial markets. From my perspective, these earnings reports are the primary driver of the stock market. If we boil investing down to its simplest terms: investing is the purchase of a company's future profits.

Each quarter all of the publicly traded companies in the country report their profits.

This is a closely watched, carefully measured exercise, that is vital to the workings of the financial markets.

From my perspective, these earnings reports are the primary driver of the stock market. If we boil investing down to its simplest terms: investing is the purchase of a company's future profits.

Those of us in this business, often promote a given company on the basis of a new product or service, or the enthusiasm of their customers. But what we are really saying is that we think in the future, this company's profits will continue to rise.

And that's why, each trading day, we bring your attention to those companies who are presenting their quarterly results. This is simply the most important, and most thorough examination any investor can make of how the company is performing.

Right now, companies are reporting on their performance for the most recently completed quarter ended December 31, of last year.

So far we've had about 40% of companies report, including many of the major corporations, such as Apple Computer, Facebook and Amazon.

Now, the research firm, Zach's reports that through last Friday, US Companies reported profits that were better than 4% higher than the year before.

This is especially good news, in light of the 3rd quarter of

  1. In that quarter profits were essentially flat, and things weren't looking that good for the year-end performance.

In fact, the Street was beginning to think in terms of an overall slow down in the economy, and several analysts were calling for a possible recession. It looks like we can put those concerns behind us.

Unless that particular cloud from China, the Coronavirus, becomes a much worse threat. And I suppose that “cloud,” an international pandemic is the major negative factors on the horizon.

One of the most interesting things about this quarter's earnings season, has been the really outstanding performance of the market leaders. We often refer to those FANG companies, Facebook Apple, Amazon Netflix and the company formerly known as Google, now Alphabet. Kinda ruined our FANG acronym.

But with the exception of Facebook, which reported soft earnings, the rest of that group has done well. Amazon's exceptional earnings were especially noteworthy.

So overall, with about 40% of major corporations reporting, the 4th quarter of 2019, has been a success. And a significant rebound from the quarter that just preceded it.

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