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S&P 500 Is Reporting Second Highest Net Profit Margin Since 2008 for Q2

Earnings

By John Butters  |  July 26, 2021

Given concerns in the market about rising inflation, what is the S&P 500 reporting for a net profit margin in the second quarter?

The blended (combines actual results for companies that have reported and estimated results for companies that have yet to report) net profit margin for the S&P 500 for Q2 2021 is 12.4%, which is above the year-ago net profit margin and above the five-year average net profit margin (10.8%). However, it is below the previous quarter’s record-high net profit margin of 12.8%. If 12.4% is the actual net profit margin for the quarter, it will mark the second-highest net profit margin reported by the index since FactSet began tracking this metric in 2008, trailing only the previous quarter.

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At the sector level, nine sectors are reporting a year-over-year increase in their net profit margins in Q2 2021 compared to Q2 2020, led by the Financials sector (21.3% vs. 8.6%). Ten sectors are reporting net profit margins in Q2 2021 that are above their five-year averages, led by the Financials sector (21.3% vs. 15.5%) and Materials (14.5% vs. 9.3%) sectors. However, only five sectors are reporting a quarter-over-quarter increase in their net profit margins for Q2 2021 compared to Q1 2021, led by the Materials (14.5% vs. 11.7%) sector.

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If 14.5% is the actual net profit margin reported by the Materials sector for Q2, it will mark the highest net profit margin reported by this sector since FactSet began tracking this metric in 2008. The current record for this sector is 11.7%, which occurred in the previous quarter. If 21.3% is the actual net profit margin reported by the Financials sector for Q2, it will mark the second-highest net profit margin reported by this sector since FactSet began tracking this metric in 2008. The current record for the sector is 22.3%, which occurred in the previous quarter.

Analysts also believe net profit margins for the S&P 500 will continue to be at least 12.0% for the remainder of 2021. As of today, the estimated net profit margins for Q3 2021 and Q4 2021 are 12.1% and 12.0%.

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Disclaimer: The information contained in this article is not investment advice. FactSet does not endorse or recommend any investments and assumes no liability for any consequence relating directly or indirectly to any action or inaction taken based on the information contained in this article.

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John Butters

Vice President, Senior Earnings Analyst, Investor Relations

Mr. John Butters is Vice President and Senior Earnings Analyst at FactSet. His weekly research report, “Earnings Insight,” provides analysis and commentary on trends in corporate earnings data for the S&P 500 including revisions to estimates, year-over-year growth, performance relative to expectations, and valuations. He is a widely used source for the media and has appeared on CNBC, Fox Business News, and the Business News Network. In addition, he has been cited by numerous print and online publications such as The Wall Street Journal, The Financial Times, The New York Times, MarketWatch, and Yahoo! Finance. Mr. Butters has over 15 years of experience in the financial services industry. Prior to FactSet in January 2011, he worked for more than 10 years at Thomson Reuters (Thomson Financial), most recently as Director of U.S. Earnings Research (2007-2010).

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