Falling Margins – WSJ.com

Commodities , Economic Indicators , What's Happening in Our Profession Feb 14, 2011 No Comments

This earnings season has seen a much-welcomed return to revenue growth, giving investors another reason to push stocks to two-year highs.

But beneath the surface lurks a fresh worry: For many companies, the cost of raw materials is rising at a faster pace than revenue. Blame it on soaring prices of everything from cotton to copper and corn. That has squeezed profit margins more markedly than many analysts anticipated—and is serving as a worrying sign for future earnings.

Procter & Gamble, Ford Motor and Kraft Foods are among dozens of companies that reported lower profit margins for the fourth quarter of 2010 compared with the third quarter.

About three-quarters of the companies in the Standard & Poor’s 500-stock index have reported their earnings so far. Some 25% of those companies have posted lower margins in the latest quarter, according to Morgan Stanley.

via ABREAST OF THE MARKET: New Danger for Stocks: Falling Margins – WSJ.com.

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Rod Sherkin

Rod is a former senior executive, responsible for Purchasing, for both Pillsbury and Ball Packaging back in the 80’s and 90’s. Since then, he has continued to work in the Purchasing field as both a consultant and founder of the website Propurchaser.com.