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Aug. 9, 2018, 5:54 p.m. EDT

U.S. companies’ sales growth is accelerating — here are the biggest winners

Thirty-seven companies in the S&P 500 increased sales per share by 25% or more while improving gross margins

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By Philip van Doorn, MarketWatch


Bloomberg
Amazon’s second-quarter sales per share were up 37% from a year earlier while the company’s gross profit margin widened.

Updated to add raw revenue growth to the tables.

As we near the end of earnings season, two trends are clear: Profits have gone through the roof, helped by lower corporate income taxes. But sales have also increased remarkably, and that trend started before the tax cuts went into effect.

About 18% of S&P 500 /zigman2/quotes/210599714/realtime SPX -1.12%  companies have fiscal quarter-end dates that don’t match the end dates of calendar quarters. Also, through Aug. 7, about 95% of S&P 500 companies had reported results for fiscal quarters ended April 27 or later.

But that’s close enough for us to show a set of remarkable numbers. According to the most recently available quarterly data through Aug. 7, 267 S&P 500 companies increased their sales per share by 10% or more from a year earlier. Here’s the data going back eight quarters:

Quarter Number of S&P 500 companies showing increases in sales per share of 10% or more from year-earlier quarter
Q2 2018 267
Q1 2018 253
Q4 2017 249
Q3 2017 189
Q2 2017 174
Q1 2017 196
Q4 2016 176
Q3 2016 165
Quarterly data through Aug. 7, 2018, subject to revision. Source: FactSet

That’s a pretty clear trend, and you can see a big move from the third quarter of 2017 to the fourth quarter. The partial recovery of oil prices played a part. (West Texas crude oil /zigman2/quotes/211629951/delayed CL.1 -0.34%  hit a high of $107.68 a barrel in June 2014 and fell to a low of $26.05 in Feb. 2016 before recovering to $60.41 at the end of 2017 and closing at $69.17 on Aug. 7.)

We have been looking at sales per share, rather than raw revenue, because a company’s sales might jump because of the acquisition of another large company. Acquisitions are often funded in whole or in part by the issuance of new shares by the acquiring company. So the per-share numbers can give a better indication of whether or not a merger was “worth it” to the acquiring company’s shareholders.

While the per-share numbers reflect any dilution from the issuance of stock for any reason, they are also boosted by the repurchase of shares, which is an important trend that shows no signs of letting up.

So while the tables below are sorted by increases in sales per share, we have added another column showing how much raw revenue increased.

Second-quarter sales winners

Here are the 37 S&P 500 companies (nearly half are energy companies) that increased their sales per share by 25% or more for their most recent reported quarters through Aug. 8, while also showing improved gross profit margins:

Company Ticker Industry Increase in sales per share - most recently reported quarter from year-earlier quarter Increase in raw revenue - most recently reported quarter from year-earlier quarter Gross income margin - most recently reported quarter Gross income margin - year-earlier quarter Total return - 2018 through Aug. 7
FMC Corp. /zigman2/quotes/200631712/composite FMC Chemicals 91% 92% 43.81% 36.14% -5%
Pioneer Natural Resources Co. /zigman2/quotes/206736173/composite PXD Oil and Gas Production 84% 85% 29.48% 14.32% 7%
Nvidia Corp. /zigman2/quotes/200467500/composite NVDA Semiconductors 69% 66% 64.48% 59.37% 30%
EOG Resources Inc. /zigman2/quotes/204634330/composite EOG Oil and Gas Production 69% 70% 33.08% 14.93% 18%
Newfield Exploration Co. Oil and Gas Production 68% 69% 50.81% 37.31% -4%
Concho Resources Inc. /zigman2/quotes/208942254/composite CXO Oil and Gas Production 66% 67% 44.02% 21.16% -10%
Phillips 66 /zigman2/quotes/207448059/composite PSX Oil Refining/Marketing 55% 40% 6.95% 4.10% 23%
Marathon Oil Corp. /zigman2/quotes/205031829/composite MRO Oil and Gas Production 54% 67% 30.34% -9.33% 25%
Incyte Corp. /zigman2/quotes/204510994/composite INCY Biotechnology 52% 60% 93.68% 91.66% -33%
Marathon Petroleum Corp. /zigman2/quotes/209634297/composite MPC Oil Refining/Marketing 52% 36% 9.43% 9.14% 8%
Nektar Therapeutics /zigman2/quotes/206715615/composite NKTR Biotechnology 47% 54% 82.52% 75.21% -10%
Valero Energy Corp. /zigman2/quotes/200735463/composite VLO Oil Refining/Marketing 44% 39% 4.90% 4.64% 28%
Anadarko Petroleum Corp. Oil and Gas Production 43% 31% 43.45% 5.13% 38%
Apache Corp. /zigman2/quotes/200648444/composite APA Oil and Gas Production 43% 44% 40.65% 15.53% 12%
Freeport-McMoRan Inc. /zigman2/quotes/200215692/composite FCX Precious Metals 40% 41% 34.58% 19.48% -7%
Jacobs Engineering Group Inc. Engineering and Construction 40% 65% 18.68% 18.27% -1%
Netflix Inc. /zigman2/quotes/202353025/composite NFLX Cable/Satellite TV 39% 40% 41.39% 31.71% 85%
Andeavor Oil Refining/Marketing 37% 59% 8.23% 4.47% 18%
Amazon.com Inc. /zigman2/quotes/210331248/composite AMZN Internet Retail 37% 39% 42.08% 38.21% 55%
Hess Corp. /zigman2/quotes/203832174/composite HES Oil and Gas Production 36% 31% 19.14% -19.27% 44%
Applied Materials Inc. /zigman2/quotes/209393259/composite AMAT Electronic Production Equipment 35% 29% 45.85% 44.78% -5%
PulteGroup Inc. /zigman2/quotes/201694804/composite PHM Homebuilding 34% 27% 23.80% 16.37% -13%
Micron Technology Inc. /zigman2/quotes/205710729/composite MU Semiconductors 34% 40% 60.57% 46.87% 28%
ConocoPhillips /zigman2/quotes/207605056/composite COP Oil and Gas Production 33% 27% 30.69% 11.71% 28%
Interpublic Group of Cos. /zigman2/quotes/203101491/composite IPG Advertising/Marketing Services 30% 9% 11.62% 11.25% 12%
Microsoft Corp. /zigman2/quotes/207732364/composite MSFT Software 30% 18% 67.57% 66.79% 27%
Helmerich & Payne Inc. /zigman2/quotes/209685666/composite HP Contract Drilling 30% 30% 9.38% 3.48% -3%
Exxon Mobil Corp. /zigman2/quotes/204455864/composite XOM Integrated Oil 29% 28% 22.80% 22.50% 1%
HollyFrontier Corp. /zigman2/quotes/201783514/composite HFC Oil Refining/Marketing 29% 30% 13.15% 5.65% 35%
E-Trade Financial Corp. /zigman2/quotes/205731930/composite ETFC Investment Banks/Brokers 29% 23% 89.62% 89.20% 22%
Occidental Petroleum Corp. /zigman2/quotes/207018272/composite OXY Oil and Gas Production 28% 28% 39.21% 19.22% 17%
PerkinElmer Inc. /zigman2/quotes/203769792/composite PKI Medical Specialties 28% 29% 45.39% 45.20% 18%
Nucor Corp. /zigman2/quotes/201889722/composite NUE Steel 26% 25% 18.06% 13.75% 1%
Apple Inc. /zigman2/quotes/202934861/composite AAPL Telecommunications Equipment/Computers 25% 18% 38.91% 38.15% 14%
Adobe Systems Inc. /zigman2/quotes/200389143/composite ADBE Software 25% 25% 86.40% 85.29% 45%
PayPal Holdings Inc /zigman2/quotes/208054269/composite PYPL Data Processing Services 25% 24% 42.00% 38.79% 16%
Illumina Inc. /zigman2/quotes/203509482/composite ILMN Biotechnology 25% 25% 70.00% 66.62% 52%
Source: FactSet

You can click on the tickers for more information about each company, including news, earnings coverage and other financials, charts, estimates and price ratios.

A company’s gross margin is its sales, less the cost of goods or services sold, divided by sales. It doesn’t incorporate overhead expenses but is useful when considering the quality of a company’s core business. If sales growth comes as a result of a significant lowering of prices in the face of competition, the trend is not sustainable. It’s a good sign if a company’s sales are growing rapidly while its gross margin is widening.

FactSet doesn’t provide gross margin numbers for banks and insurance companies, which use other measures of profitability for their products and services. So here are the six S&P 500 financial-services companies that showed increases in sales per share of 25% or more for the second quarter:

Company Ticker Industry Increase in sales per share - most recently reported quarter from year-earlier quarter Increase in raw revenue - most recently reported quarter from year-earlier quarter Total return - 2018 through Aug. 7
SVB Financial Group /zigman2/quotes/200548254/composite SIVB Regional Banks 38% 40% 26%
Goldman Sachs Group Inc. /zigman2/quotes/209237603/composite GS Investment Banks/Brokers 36% 29% -12%
Fifth Third Bancorp /zigman2/quotes/207561596/composite FITB Regional Banks 34% 24% -3%
Everest Re Group Ltd. /zigman2/quotes/200609425/composite RE Property/Casualty Insurance 26% 26% 5%
MetLife Inc. /zigman2/quotes/206319319/composite MET Life/Health Insurance 26% 19% -12%
Morgan Stanley /zigman2/quotes/209104354/composite MS Investment Banks/Brokers 26% 20% -9%
Source:FactSet

Don’t miss: Growth or value stocks? These companies may provide the best of both

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Philip van Doorn covers various investment and industry topics. He has previously worked as a senior analyst at TheStreet.com. He also has experience in community banking and as a credit analyst at the Federal Home Loan Bank of New York.

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