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

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.

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.

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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