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Pragmatic Capitalism

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U.S. Profit Margin Expectations

By Marc Chandler, Global Head of Currency Strategy, Brown Brothers Harriman

This Great Graphic was posted on Business Insider by Sam Ro. In appears to originally come from Goldman Sachs. It captures expectations for US corporate profit-margins.

The chart contrasts the bottom up consensus with Goldman’s top down forecasts. The former calls for a 9.3% increase in net margins,while the latter (Goldman) says 8.7%-8.9%.

Earnings, Goldman argues, are more sensitive to changes in margins than to GDP or sales growth. It argues that a 50 bp shift in margins equals $5 a share.

 

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