Sep 20, 2018

Survey: Top executives expect more payouts for shareholders

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Data: Deloitte; Chart: Andrew Witherspoon/Axios

Top executives of North American companies said expectations for earnings and revenue growth for the next year have declined slightly, but prospects to return more money to shareholders are on the upswing, according Deloitte's quarterly survey of more than 130 chief financial officers.

The big picture: At U.S. companies, expectations for shareholder payouts are at the highest level in the survey's 8-year history, accelerated in recent months — along with stock buybacks — by proceeds from the GOP's tax law. Whether corporations use the windfall to fund dividends or share repurchases as opposed to reinvesting in the broader economy has been a sticking point for those who oppose the tax law.

Other findings:

  • For the first time this year, executives said internal factors like quality of talent or innovation were more of a risk to company performance than external ones like an economic slowdown, interest rates, or policy uncertainty. Still, CFOs were "overwhelmingly" worried about the trade war and tariffs.
  • More than 70% of CFOs said U.S. stock markets are overvalued. That's the most in two quarters, but still below the two-year average.
  • Optimism about their own company's prospects fell for the second straight quarter, led by companies in the technology and banking sectors.

Go deeper

S&P earnings expected to grow in Q4 for the first time since 2018

Reproduced from FactSet; Chart: Axios Visuals

Given the way S&P 500 earnings have beaten estimates over the past few years it is likely the index will report earnings growth in the fourth quarter — the first and only quarter of growth last year.

Between the lines: John Butters, FactSet's senior earnings analyst, said in a note that on average nearly three-quarters of S&P 500 companies' actual earnings have exceeded estimates by about 5%.

Go deeperArrowJan 6, 2020

World Bank cuts growth forecast for fourth time in a row

Photo: Win McNamee/Getty Images

The World Bank cut its global growth forecast for the fourth straight time on Wednesday, reducing expectations by 0.2 percentage points each year for 2019, 2020 and 2021.

"Global economic growth is forecast to edge up to 2.5% in 2020 as investment and trade gradually recover from last year’s significant weakness but downward risks persist. ... U.S. growth is forecast to slow to 1.8% this year, reflecting the negative impact of earlier tariff increases and elevated uncertainty."
— World Bank statement on its Global Economic Prospects report
Go deeperArrowJan 9, 2020

Wall Street has its best year since 2013

Data: FactSet; Chart: Axios Visuals

Wall Street had its biggest annual gain in six years — with the S&P 500 rising 29% and the Nasdaq Composite rising 35% in 2019. The Dow lagged behind other indices, but saw its biggest yearly gain since 2017.

Why it matters: U.S. stocks rebounded from 2018's year-end meltdown to log impressive gains, despite uncertainty stemming from the trade war and a slowdown in economic growth.