Next stock market crash: Shrinking profit growth spells doom for rally - Business Insider

simply click here to claim your deal and get access to all exclusive Business Insider PRIME content.

Investors are willing to pay ever-increasing prices for stocks despite the decline in profits growth over the past year. This so-called multiple expansion has subsequently lifted various gauges of theInvestors have an "incredible valuation problem," Andrew Lapthorne, the head of quantitative equity research at Societe Generale, said in a recent note.

One way Lapthorne unearths what is happening is by stacking the profitability of the largest companies in each sector against their smallest counterparts. He found that the gap, which he refers to as corporate inequality, is at its widest since at least 1990. In addition to Lapthorne's observation above, two plain vanilla measures of profitability — EBIT growth and margins — show a deteriorating trend.

And secondly, profit margins are under pressure due to a combination of higher costs and slower sales growth. But even in the public market, there's the nagging question of how much longer investors will continue bidding up prices in the absence of an earnings growth rebound.

Россия Последние новости, Россия Последние новости

Similar News:Вы также можете прочитать подобные новости, которые мы собрали из других источников новостей

Carlos Ghosn: The inside story on his rise and fall, and what's next - Business InsiderCarlos Ghosn's transformation from business icon to international fugitive was entirely predictable, industry leaders say. But his next act could surprise everyone.
Источник: BusinessInsider - 🏆 729. / 51 Прочитайте больше »

SpaceX's next rocket launch is doomed, and that's great for astronauts - Business InsiderSpaceX is about to launch a doomed rocket for NASA — and that's a good thing. Here's what you need to know about Saturday's explosive and crucial in-flight abort test. 🚀
Источник: BusinessInsider - 🏆 729. / 51 Прочитайте больше »