Non-GAAP Adjusted After-tax Net Income, which is generally used by the investment community to value common stocks, was used when this amount was disclosed in the company's earnings release, and it excludes Special, Unusual Items which are significant in amount relative to Reported GAAP Net Income.
This 4.3% Dow total earnings growth in 2012 is a bit below the Total Earnings growth of 7.4% in 2012 for the 233 US public companies filing with the SEC with earnings of more than $1 bil each in either annual 2012 or 2011. And when I add in the four large Financial Partnerships filing with the SEC, the Total Earnings growth in 2012 moves up to 8.8%. Further, when I add in the huge turnaround in Freddie Mac's earnings in 2012, this Total Earnings growth in 2012 moves up further to 10.8%. And after Fannie Mae releases its 2012 earnings, which will be very good (yeah, I know it sounds incredible, but it still hasn't released its December 2012 earnings yet), this Total Earnings growth should advance to above 12.0%.
On an Earnings Per Share basis, the total growth of these 30 Dow Industrials was a more robust 7.1%, which was a company-earnings-weighted 2.8% higher than the 4.3% total earnings growth.
When you think about it, it is just amazing that these 30 Dow Industrial companies generated 7.1% EPS growth in 2012, a Presidential election year where the US Congress was doing everything possible to substantially slow down the US economy, hoping that it would result in President Obama being defeated in the election.
Just think what the US economy and these Big Corps' earnings will do if the US Congress would start working with, instead of against, the Obama Administration.
So, what's with this substantial add-on 2.8% earnings growth on an EPS basis for these Dow Industrial companies, as compared with the 4.3% growth on just an earnings growth basis.
Well, EPS and EPS growth are what drive common stock prices.
Thus, it's the massive common stock buyback programs that the overwhelming majority of these Dow Industrial companies have. The US Fed has facilitated this with its extremely low interest rates, which makes these common stock buyback programs incredibly lucrative for all large US Corps.
Of the 30 Dow Industrial companies, only 5 of them had their average diluted common shares outstanding increase from 2011 to 2012: Bank of America +5.7%, Boeing +1.5%, Johnson & Johnson +1.3%, Verizon +0.8% and Caterpillar +0.5%. I have to wonder why the latter four of these five companies haven't taken advantage of this common stock buyback economic windfall.
But the problem with these massive stock buyback programs is that they only benefit the very wealthy and they further expand the huge wealth gap between the very wealthy and everyone else, including small businesses, who are not able to take economic advantage of it.
And these massive common stock buyback programs have been one of the major reasons for the US stock market advancing so high as compared what has been happening with the US general economy and with US real GDP growth.
Why? Well, by increasing annual earnings growth from 4.3% to 7.1% on an annual long-term EPS growth basis, the intrinsic value of the common stock goes up dramatically, thus causing an artificially high stock market bubble. The US stock market is not increasing so dramatically because the US economy is growing at the same pace. Instead, the US stock market is growing so dramatically because of the artificially high EPS growth, caused by the massive common stock buybacks, which have been fueled by US Fed action on interest rates and by clear lack of US Congressional oversight. And this artificially high US stock market only benefits economically the top 1%, leaving the remaining 99% even further behind.
And instead of legislating to more fairly deal with this, the US Congress just sits there and twittles its thumbs.
Below here is the Non-GAAP Adjusted After-tax Net Income for both annual 2012 and 2011 for each of these 30 Dow Industrial companies:
| Non-GAAP | |||||||
| Adjusted | |||||||
| EPS | |||||||
| Non-GAAP | Non-GAAP | Growth | |||||
| Non-GAAP | Non-GAAP | Adjusted | Adjusted | Non-GAAP | Over | ||
| Annual | Annual | Net | Net | Adjusted | Earnings | ||
| 2012 | 2011 | Income | Income | EPS | Growth | ||
| Adjusted | Adjusted | Increase | Increase | Increase | Positive | ||
| Net | Net | (Decrease) | (Decrease) | (Decrease) | % | ||
| Company | FYE | Income | Income | Amount | % | % | Spread |
| mils of $s | mils of $s | mils of $s | |||||
| Dow Industrials | |||||||
| Exxon Mobil | Dec | 44,880 | 41,060 | 3,820 | 9.3% | 15.2% | 5.9% |
| Chevron | Dec | 26,179 | 26,895 | (716) | -2.7% | -0.9% | 1.8% |
| Microsoft | Jun | 23,681 | 22,720 | 961 | 4.2% | 5.3% | 1.1% |
| JPMorgan Chase | Dec | 19,877 | 17,568 | 2,309 | 13.1% | 16.1% | 3.0% |
| IBM | Dec | 17,627 | 16,318 | 1,309 | 8.0% | 13.5% | 5.5% |
| Walmart | Jan | 16,999 | 15,766 | 1,233 | 7.8% | 11.1% | 3.3% |
| Pfizer | Dec | 16,476 | 17,839 | (1,363) | -7.6% | -3.5% | 4.1% |
| General Electric | Dec | 16,065 | 14,915 | 1,150 | 7.7% | 10.1% | 2.4% |
| Johnson & Johnson | Dec | 14,345 | 13,867 | 478 | 3.4% | 2.0% | -1.4% |
| AT&T | Dec | 13,447 | 12,674 | 773 | 6.1% | 8.5% | 2.4% |
| Merck | Dec | 11,743 | 11,697 | 46 | 0.4% | 1.3% | 0.9% |
| Intel | Dec | 11,580 | 13,524 | (1,944) | -14.4% | -10.4% | 4.0% |
| Procter & Gamble | Jun | 11,324 | 11,617 | (293) | -2.5% | -0.5% | 2.0% |
| Cisco Systems | Jul | 10,017 | 9,033 | 984 | 10.9% | 14.2% | 3.3% |
| Coca Cola | Dec | 9,217 | 8,944 | 273 | 3.1% | 4.7% | 1.6% |
| Hewlett Packard | Oct | 8,035 | 10,379 | (2,344) | -22.6% | -17.0% | 5.6% |
| Verizon | Dec | 6,411 | 6,104 | 307 | 5.0% | 4.2% | -0.8% |
| Caterpillar | Dec | 5,961 | 4,928 | 1,033 | 21.0% | 20.3% | -0.7% |
| Walt Disney | Sep | 5,682 | 4,807 | 875 | 18.2% | 24.2% | 6.0% |
| UnitedHealth | Dec | 5,526 | 5,142 | 384 | 7.5% | 11.6% | 4.1% |
| McDonalds | Dec | 5,465 | 5,503 | (38) | -0.7% | 1.7% | 2.4% |
| American Express | Dec | 5,076 | 4,935 | 141 | 2.9% | 7.5% | 4.6% |
| United Technologies | Dec | 4,847 | 4,831 | 16 | 0.3% | 0.4% | 0.1% |
| Home Depot | Jan | 4,680 | 3,883 | 797 | 20.5% | 25.5% | 5.0% |
| Boeing | Dec | 4,491 | 3,961 | 530 | 13.4% | 11.8% | -1.6% |
| 3M | Dec | 4,444 | 4,283 | 161 | 3.8% | 6.0% | 2.2% |
| DuPont | Dec | 3,173 | 3,392 | (219) | -6.5% | -6.2% | 0.3% |
| Bank of America | Dec | 2,760 | 85 | 2,675 | 3147.1% | 2500.0% | -647.1% |
| Travelers | Dec | 2,441 | 1,390 | 1,051 | 75.6% | 89.3% | 13.7% |
| Alcoa | Dec | 262 | 812 | -550 | -67.7% | -66.7% | 1.0% |
| Total of all 30 | 332,711 | 318,872 | 13,839 | 4.3% | 7.1% | 2.8% |
