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S&P 500 Soars: Hidden Bargains Amidst Record Highs
12 Aug
Summary
- Companies show strong sales growth and improved profit margins.
- Investor bargains exist despite the S&P 500 nearing record highs.
- Earnings season is ongoing, with many companies yet to report.
The S&P 500 is approaching record territory, buoyed by a robust earnings season. However, a deeper analysis reveals that attractive investment opportunities, or bargains, are still available. This is evident in companies that have achieved significant sales growth while simultaneously improving their gross and operating profit margins.
Focusing on profit margins offers a more reliable measure of a company's financial health, as it filters out distorting one-time events. The earnings season is effectively perpetual, with roughly 27% of S&P 500 companies having non-calendar fiscal reporting periods. Nvidia, for instance, is set to report its fiscal second-quarter results for 2027 on August 26.
Approximately 90% of S&P 500 companies have already disclosed their results for fiscal quarters ending May 15 or later. This ongoing reporting period has identified 17 S&P 500 companies that have surpassed expectations with at least 40% quarterly sales per share growth, alongside improved profit margins.
