In an earlier post, I found that the 902 largest publicly-held US Corps, with either Core Pretax Earnings or Losses of at least $200 mil in either 2010 or in 2009, registered Total Core Pretax Earnings growth of a torrid 77% in 2010.
And in a subsequent post, I found that the largest 450 publicly-held US Corps, with Core Pretax Earnings or Losses of at least $150 mil in either the first quarter of 2011 or in the first quarter of 2010, generated Total Core Pretax Earnings growth of another 33% in the 1Q 2011.
I think the 33% earnings growth in the 1Q 2011 is just as significant of an accomplishment, and perhaps even more so, as the 77% earnings growth in 2010, because the 2010 earnings base was elevated so substantially by the 77% earnings growth in 2010.
This post extends the 1Q 2011 earnings research by focusing on the 153 mid-sized, publicly-held US Corps with Core Pretax Earnings or Losses of at least $90 mil, but also less than $150 mil, in either the first quarter of 2011 or in the first quarter of 2010.
These 153 mid-sized US Corps, by registering Total Core Pretax Earnings growth of 33% in the 1Q 2011, precisely matched the 33% earnings growth of the 450 larger US Big Corps.
To show how broad scale this 1Q 2011 earnings growth was, 79% of the 153 publicly-held, Mid-sized US Corps had their core earnings increase in the 1Q 2011, whereas a slightly lower 78% of the 450 publicly-held US Big Corps had their core earnings increase in the 1Q 2011.
What all of this tells me is that wise actions taken by the Obama Administration, the Fed, and the US Congress, have created a robust economic environment in which publicly-held firms of all sizes can flourish.
These spectacular corporate earnings of the past 15 months have also spurred higher State Tax Receipts for several reasons.
The resultant higher corporate taxable income generates higher State Corporate Income Tax Receipts.
But more importantly, the higher corporate taxable income results in higher State Individual Income Tax Receipts. When corporations have much higher earnings, they tend to give higher bonuses, higher raises, more robust stock option grants, and they should also eventually do more hiring. Also, these much higher company earnings drive much higher stock prices. Thus, there are much higher State Individual Taxable Capital Gains from the higher stock prices. Furthermore, there are much higher State Taxable W-2 compensation earnings from the increased number and amount of stock option exercises by company employees.
In addition, there are much higher State Sales Tax Receipts from the higher after-tax cash in the hands of corporate employees.
On the downside, a recession crater like we had, and the resultant substantial drop in company earnings, negatively feeds upon itself, and results in substantial State Tax Collection reductions.
On the other hand, when the sharp recession turns around, like it has in the past 15 months, and companies substantially increase their earnings, this positively feeds upon itself, and results in substantial State Tax Collection increases. The key to keeping these State Tax Collections pouring in is for the US Government to keep providing the robust economic environment that permits companies' profits to flourish.
Companies have started hiring. If they think these robust earnings will continue, they will do a lot more hiring.
But one critical missing link to the much-needed robust job creation is that there is way too much risk for someone to start, or to expand, a business. The energy costs are too high, and much too volatile. And further, since there has been more than a decade of continuing substantial energy cost increases, many prospective business owners or business expanders make the economic assessment that the risk/reward is overwhelmingly weighted on the risk side of the equation, particularly when focusing on the substantial risk of future much higher energy costs.
What the US government needs to do is to creatively design incentive programs for business start-ups, and for smaller and medium-sized businesses, that substantially reduces their energy costs, and also substantially reduces the risk of much higher future energy costs.
This energy problem is so severe, I think I would even consider some bold US government initiatives like the following two.
First, when oil prices continue above some highly undesirable predetermined high level for some predetermined period of time, then that would automatically trigger a requirement that the CEOs of the Big 5 Oil Companies, operating heavily in the US (i.e. Exxon Mobil, Chevron, ConocoPhillips, Royal Dutch Shell, and BP), appear before the Senate Finance Committee or some other Senate Committee, and address the unreasonably high oil and gas prices, like they recently did when they gave their perspectives on the issue of Oil company tax subsidies. I think this Senate Finance Committee hearing on Oil Company tax subsidies was exceptionally informative and educational to the US public.
And second, I think consideration should be given to have the US government enter into some wise long-term hedging oil price contracts in order to moderate, at least to some extent, the devastating economic risk of much higher future energy costs on US businesses and on US individuals.
When oil prices move up precipitously, with the resultant US government economic hedging gains, these hedging gains by the US government should be shared in some reasonable way with US individuals paying the high energy costs and as economic incentives to both US small business start-ups in the US, and to US small and medium-sized business expansions in the US.
In the much more unlikely event that oil prices move down precipitously, the resultant US government hedging losses would be substantially trumped by the additional federal government tax receipts from the much stronger US economy resulting from the much lower energy cost environment.
Anyway, from a thorough review of 1Q 2011 earnings releases and 1Q 2011 10-Q SEC filings, below here are the first quarter 2011 Core Pretax Earnings of these 153 publicly-held, US Mid-sized Corps. In defining Core Pretax Income, I have excluded large Fixed Asset Impairments, particularly those related to Intangible Assets, large Acquired In Process R&D Charges, large Gains and Losses on Debt Extinguishment, and clearly one-time, and clearly unusual large Charges or Credits.
...........................................................................Increase
.......................................Pretax Income(Loss)..(Decrease)...
..........................................1Q 2011..1Q 2010....Amount...%.
...................................................(millions of dollars)....
Mid-sized Tech
BMC Software........................144..........117..........27......23%
Priceline.com........................141............81..........60......74%
Alliance Data Systems...........140...........75..........65......87%
Nvidia(1)...............................129..........139........(10)....(7)%
Dolby Labs............................122..........134........(12).....(9)%
Microchip Technology...........120...........84..........36......43%
Vishay Intertechnology.........118...........63..........55......87%
Jabil Circuit(2).......................117...........41..........76.....185%
Novellus Systems...................113...........51..........62.....122%
Verisk Analytics.....................110...........98..........12......12%
Tech Data...............................109...........87..........22......25%
Alliant Techsystems(3)..........108..........129........(21)...(16)%
Amdocs(4).............................107..........102...........5........5%
Intuit.....................................102..........126........(24)...(19)%
Netflix.....................................98............54..........44......81%
Varian Semiconductor.............96............44..........52.....118%
Allegheny Technologies...........94............33..........61.....185%
Teradata..................................90............86............4........5%
Garmin(5)................................85............92..........(7)....(8)%
Ingram Micro...........................81............97........(16)...(16)%
Expedia(6)...............................74............92........(18)...(20)%
Total 21 Mid-sized Tech.......2,298.......1,825........473......26%
Mid-sized Oil&Gas
Continental Resources(7).......148............91..........57......63%
Holly Corp..............................140..........(40).......180.....450%
Pioneer Natural Resources(8).126..........136........(10).....(7)%
Nabors Industries...................123............52..........71.....137%
QEP Resources........................117..........125..........(8).....(6)%
Patterson UTI Energy..............114.............7........107...1529%
FMC Technologies...................108..........149........(41)...(28)%
RPC.........................................106............22..........84.....382%
Plains Exploration&Prod(9).....102............90..........12......13%
Enbridge Energy Prtnrs LP(10)..99..........128.........(29)...(23)%
Ultra Petroleum(11)...................97..........138.........(41)...(30)%
Magellan Midstream Prtnrs LP...91............65..........26......40%
Atwood Oceanics.......................90............77..........13......17%
Boardwlk Ppln Prtrs LP(12)........90............90............0........0%
Rowan Companies.....................37............94.........(57)...(61)%
Pride Intl...................................34............95.........(61)...(64)%
Total 16 Mid-sized Oil&Gas....1,622........1,319........303......23%
Mid-sized Finance
Genworth Financial..................146..........119..........27......23%
First Republic Bank..................143..........120..........23......19%
Comerica.................................138............30........108.....360%
Alliance Bernstein LP...............138...........144..........(6).....(4)%
American Capital Agency.........134............53..........81.....153%
General Motors Financial.........130............86..........44......51%
Raymond James Financial........124............94..........30......32%
Jones Financial........................118............77..........41......53%
Affiliated Managers..................116............65..........51......78%
Amerigroup.............................113............68..........45......66%
Republic Bancorp(KY)..............110............69..........41......59%
Protective Life..........................109..........111...........(2)......(2)%
BOK Financial...........................104............91..........13......14%
Newcastle Investment(13)..........99............92............7........8%
SVB Financial.............................96............41..........55.....134%
Equifax.......................................96............90............6........7%
KKR Financial(14).......................95............90............5........6%
American Financial Group..........95..........147........(52)...(35)%
Eaton Vance...............................93............82..........11......13%
SEI Investments.........................92............96..........(4)....(4)%
Zions Bancorp............................90...........(92).......182.....198%
Alleghany...................................90............74..........16......22%
Lender Processing Services........90...........117........(27)...(23)%
HCC Insurance...........................63...........103........(40)...(39)%
Total 24 Mid-sized Finance....2,622........1,967........655.....33%
Mid-sized Health Care
Community Health Systems......135..........127............8........6%
Herbalife Ltd.............................121............62..........59......95%
Henry Schein............................120............98..........22.....22%
Life Technologies(15)................115..........118...........(3)....(3)%
Perrigo......................................113............85..........28......33%
Waters.......................................113............90..........23......26%
CareFusion(16)..........................112............59..........53......90%
Endo Pharmaceuticals...............102............97............5........5%
Watson Pharmaceuticals(17).....100............84..........16......19%
Health Management Associates...98............84..........14......17%
Cerner.........................................96............77..........19......25%
Kinetic Concepts..........................94............75..........19......25%
Dentsply Intl................................94............83..........11......13%
Omnicare.....................................80............92.........(12)...(13)%
Total 14 Mid-sized Health Care.1,493........1,231........262......21%
Mid-sized Retail
Abercrombie & Fitch..................144............94..........50......53%
Dicks Sporting Goods..................144..........113..........31......27%
Whole Foods Market...................143..........119..........24......20%
CarMax.......................................141..........122..........19......16%
Amerigas Partners LP(18)...........138..........149........(11).....(7)%
Petsmart.....................................135..........119..........16......13%
American Eagle Outfitters...........135..........128............7........5%
Urban Outfitters..........................121..........119............2........2%
Foot Locker.................................90............39..........51.....131%
BJs Wholesale Club.......................60............93........(33)...(35)%
Total 10 Mid-sized Retail..........1,251........1,095.......156......14%
Mid-sized Other
Joy Global..................................149...........113..........36......32%
Seaboard....................................149............77..........72......94%
FMC Corp...................................146..........127............19......15%
Coca-Cola Enterprises.................144..........146...........(2).....(1)%
Corn Products Intl(19)................143............67..........76.....113%
ITT Educations Services..............141..........143...........(2).....(1)%
Reliance Steel..............................140............66..........74.....112%
KBR.............................................139............93..........46......49%
Windstream(20)..........................138..........124..........14......11%
Ecolab.........................................138..........139...........(1)....(1)%
Devry..........................................137..........122..........15......12%
Natural Fuel Gas(21)....................137..........130............7........5%
Albemarle....................................133............71..........62......87%
Ametek........................................133............85..........48......56%
Del Monte Foods..........................132............91..........41......45%
Church & Dwight..........................132..........125............7........6%
Flowserve....................................131..........112..........19......17%
Ralcorp(22).................................130............95..........35......37%
Westlake Chemicals......................129............27........102.....378%
Wyndham WW(23).......................129............82..........47......57%
Fastenal.......................................129............91..........38......42%
URS..............................................127..........116..........11........9%
Roper Industries..........................126............85..........41......48%
Jacobs Engineering......................126..........121............5........4%
Constellation Brands(24)..............124............33..........91.....276%
Fortune Brands(25)......................123..........103..........20......19%
Alaska Air.....................................121............10.........111...1110%
Airgas(26).....................................120............90.........30......33%
Rockwood Holdings(27)................118............48..........70....146%
Weight Watchers Intl.....................118............72..........46......64%
Walter Energy................................116............67..........49......73%
Intl Flavors & Fragrances..............116............89..........27......30%
Career Education...........................115............89..........26......29%
Autonation.....................................115............97..........18......19%
Crown Holdings(28).......................113..........106............7........7%
Education Management..................113..........109............4........4%
Sauer-Danfoss................................111............33..........78...236%
Questar...........................................111..........114..........(3)....(3)%
Intl Game Technology(29).............108............94..........14......15%
Westvaco.......................................107............28.........79....282%
Newell Rubbermaid(30)................107............98............9.......9%
Owens Illinois................................105..........123.........(18)...(15)%
Pall Corp........................................104............72..........32.....44%
Huntsman(31)................................102..........(38).......140....368%
Green Mountain Coffee Roasters....102............39..........63...162%
AGCO............................................101..............2..........99...4950%
LKQ Corp(32).................................101............83..........18......22%
Kansas City Southern(33)..............100...........73..........27......37%
Molson Coors...................................99...........75..........24......32%
McCormick......................................99............89..........10......11%
Molex..............................................98............57..........41......72%
Cintas..............................................97............73..........24.....33%
Sherwin Williams.............................95............59..........36......61%
McDermott......................................95............72..........23......32%
Frontier Communications...............93............76..........17......22%
Royal Caribbean(34)........................92..............1..........91......NM
WABCO Holdings(35).......................92............41..........51.....124%
Stericycle........................................91............77..........14.....18%
METROPCS Communications...........90............38..........52....137%
Iron Mountain.................................90...........67..........23......34%
Telephone & Data Systems...............81..........100........(19)...(19)%
Energizer Holdings..........................61..........128........(67)...(52)%
H&R Block......................................(17)..........97.......(114).(118)%
Terex(36)........................................(36).......(114)........78......68%
Host Hotels & Resorts......................(80).......(102)........22......22%
USG................................................(108).......(127)........19......15%
US Airways(37)..............................(114)........(94).......(20)...(21)%
Vulcan Materials(38)......................(128).......(127)........(1).....(1)%
Total 68 Mid-sized Other................6,719......4,568.....2,151....47%
Total 153 in all Sectors...............16,005.....12,005....4,000...33%
(1) Nvidia 2011 PTI excludes legal settlement gain.
(2) Jabil Circuit 2011 PTI excludes both loss on dispositions and settlement of receivable charges.
(3) Alliant Techsystems 2010 PTI excludes intangible asset impairment charge.
(4) Amdocs 2010 PTI excludes asset impairment charge.
(5) Garmin excludes foreign currency gains and losses.
(6) Expedia 2011 PTI includes strategic investment in technology and international expansion, which are required to be immediately charged to earnings under GAAP.
(7) Continental Resources exclude gains and losses on derivatives.
(8) Pioneer Natural Resources exclude gains and losses on derivatives.
(9) Plains Exploration & Production 2011 PTI exclude both losses on derivatives and gains on fair value changes in investments. Its 2010 PTI exclude both gains on derivatives and legal recovery gains.
(10) Enbridge Energy Partners LP 2011 PTI excludes insurance recovery gains.
(11) Ultra Petroleum exclude gains on derivatives.
(12) Boardwalk Pipeline Partners LP 2011 PTI excludes loss on debt extinguishment.
(13) Newcastle Investment exclude gains on debt extinguishment.
(14) KKR Financial 2010 PTI excludes gain on debt restructuring.
(15) Life Technologies 2010 PTI excludes both loss on debt retirement and gain on divestiture.
(16) CareFusion 2011 PTI excludes gain on sale of assets.
(17) Watson Pharmaceuticals 2011 PTI excludes losses on asset sales and impairments. Its 2010 PTI excludes gain on sale of securities.
(18) Amerigas Partners LP 2011 PTI excludes loss on debt extinguishment. Its 2010 PTI excludes loss on interest rate hedges.
(19) Corn Products Intl 2011 PTI excludes gain from litigation settlement award.
(20) Windstream 2011 PTI excludes loss on debt extinguishment.
(21) Natural Fuel Gas 2011 PTI excludes gain on sale of unconsolidated subsidiary.
(22) Ralcorp 2010 PTI exclude intangible asset impairment charge.
(23) Wyndham Worldwide 2011 PTI excludes asset impairment charge.
(24) Constellation Brands exclude intangible asset charges.
(25) Fortune Brands 2011 PTI excludes business separation cost charges.
(26) Airgas 2011 PTI excludes charges for unsolicited takeover costs. Its 2010 PTI exclude both loss on debt extinguishment and charges for unsolicited takeover costs.
(27) Rockwood Holdings 2011 PTI excludes loss on debt extinguishment.
(28) Crown Holdings 2011 PTI excludes loss from debt retirement.
(29) Intl Game Technology 2010 PTI excludes asset impairment charge.
(30) Newell Rubbermaid 2011 PTI excludes loss on debt retirement.
(31) Huntsman 2010 PTI loss on debt extinguishment.
(32) LKQ Corp 2011 PTI excludes loss on debt retirement.
(33) Kansas City Southern 2010 PTI excludes loss on debt retirement.
(34) Royal Caribbean 2010 PTI excludes gain on legal settlement.
(35) WABCO Holdings 2011 PTI excludes gain from indemnification and other settlements.
(36) Terex 2011 PTI excludes both gain on sale of stock and loss on debt retirement.
(37) US Airways 2010 PTI excludes gain on sale of investments.
(38) Vulcan Materials 2011 PTL excludes legal settlement recovery gains. Its 2010 PTI excludes gains of sales of property, plant and equipment and gains on sales of businesses.
