A recent report by MARE (Market Analysis, Research and Education), a unit of Fidelity Management and Research Co., concluded that strong corporate sales growth in the fourth quarter of 2010 reflected a possible shift in the economic climate.
Many companies’ earnings exceeded expectations in the fourth quarter, possibly foreshadowing an increase in corporate spending. Companies that experience strong sales typically are more willing to spend capital on business growth, and such spending is a vote of confidence in future prospects. However, higher spending raises costs and can reduce growth in profit margins. Although the U.S. economy remains strong, MARE expects earnings growth among large U.S. companies to moderate this year, compared to last year’s strong, broad-based earnings performance.
For those who want to take a closer look at this interesting analysis, you can find it at http://www.Fund-Scout.com/Papers/Q42010.
Many companies’ earnings exceeded expectations in the fourth quarter, possibly foreshadowing an increase in corporate spending. Companies that experience strong sales typically are more willing to spend capital on business growth, and such spending is a vote of confidence in future prospects. However, higher spending raises costs and can reduce growth in profit margins. Although the U.S. economy remains strong, MARE expects earnings growth among large U.S. companies to moderate this year, compared to last year’s strong, broad-based earnings performance.
For those who want to take a closer look at this interesting analysis, you can find it at http://www.Fund-Scout.com/Papers/Q42010.
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