Profits are proliferating at these nine companies
Tech and commodities lead the way as investors are looking for confidence
Corporate profits are looking better than they have in some time. But a few companies are about to show how they’re stacking up the earnings gains.
There are nine companies in the Standard & Poor’s 500 — including online retailer Amazon. com, mining and oil and gas exploration company Freeport-McMoRan and computer graphics hardware maker Nvidia — expected to have increased their adjusted profit in 2016 by 70% or more, based on a USA TODAY analysis of data from S& P Global Market Intelligence.
Seeing such massive jumps in corporate profits is critical since investors are looking to justify the rising stock prices they’re paying. Companies are starting to report their fourth- quarter and 2016 earnings results. Earnings in the Stan- dard & Poor’s 500 index as a whole are expected to rise 4.3% during the fourth quarter, marking the second consecutive period of higher profits, S& P Global says.
The S& P 500 index is up nearly 21% over the past year as investors price in higher corporate profit growth on changes expected to be made by the incoming Donald Trump administration.
One of the biggest profit gainers last year is likely to be the one with a CEO ( Jeff Bezos) that has tangled publicly with Trump. Amazon. com has been the biggest winner, by far, of the profit explosion in the digital era. The company is expected to deliver adjusted quarterly profit for 2016 of $ 4.79 a share, which is nearly four times greater than its profit in 2015, S& P Global data show. It’s hardly a surprise to investors, who have pushed shares of the company up 41% over the past 12 months. The company’s plans to hire 100,000 U. S. workers shows the company has big ambitions, from opening physical stores to expanding its grocery business, Edward Yruma, analyst at PCS Research, says to clients.
Nvidia, a maker of graphics chips for computers and processors for smartphones, has been well- positioned for a number of changes in technology. Ad- justed profit is expected to have risen 75% last year to $ 2.92 a share as use of its chips in devices proliferates.
A rebound in certain commodity prices offered a lift to some materials companies’ profits. Freeport- McMoRan, which explores for everything from copper to oil and gold and silver, is expected to see its profit this year jump to 33 cents a share after suffering a loss of 8 cents a share a year ago. Prices of highgrade copper jumped nearly 17% last year, giving an important boost to the company. Energy prices gained even more, with the price of crude oil rising by nearly 47%.
Earnings growth could be what gives investors confidence.
“The current economic cycle is aged. However, our work suggests near- term recession risks are low,” says Keith Lerner, strategist at SunTrust Advisory Service. “We anticipate a positive, albeit bumpy, stock market path in 2017 as earnings rebound and the economic recovery continues.”