You Need to Increase the Top Line to Sustain the Bottom Line

S&P 500 Q2 sales are off 24.82% Y/Y or $597B; 1-year is off 13.24% or $1.27T Industrials posted their worst 12-month percentage drop since our record started in 1964, -9.03% For reported issues only: Operating Margins at 6.6%, with Financials at 2.7% and Industrials (old) at 7.3% As Reported flat at 4.9% click here

Sales deteriorated significantly during the quarter, with damage to margins minimized by higher productivity - those of us that worked, worked a lot harder. S&P 500 sales for the quarter posted their third consecutive double-digit year-over-year decline, with the 12-month decline at -13.2%. Consumer Staple sales for the quarter were slightly down, Financials and Health Care were slightly up, Information Technology was off 12%, and Energy dropped 46%. Industrial sales over the last 4-quarters posted their worst decline (-9%) since our records started in 1964.

If companies can increase sales, high margins (from their cost cutting), should enhance profits. Consumer and corporate spending remains key. Once the storm is over, companies may try to use all that built-up cash (near record for Q2) via M&A, to increase their sales.

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