Gavekal Capital: US Corporate Profits and Margins Bounced Back In The 2Q

Thursday, August 28, 2014

US Corporate Profits and Margins Bounced Back In The 2Q

The preliminary estimate for corporate profits in the second quarter were released this morning and showed a rebound from the abysmal first quarter profits. Looking at after-tax profits with inventory and capital consumption adjustments, corporate profits 8.4% quarter-over-quarter AR which is the largest gain in three years. However, on a year-over-year basis, corporate profits remain 9% lower. Before-tax corporate profits with inventory and capital consumption adjustments rose by 8% quarter-over-quarter AR and are just slightly negative on a year-over-year basis. The highly watched profit margin measure rebounded from 8.1% in the first quarter to 8.6% in the second quarter. Gross cash flow margin also increased from 15.3% to 15.9%.

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