Profits at Largest Georgia Companies
Second-quarter profits rose for Georgia’s largest publicly-traded companies, beating the S&P 500’s earnings growth. The Georgia firms’ stock returns were likewise higher.
Company, Q2 2013 net income, Q2 2012 net income, Change from 2012, Q3 2013 profit estimate, YTD stock return
Home Depot*, $1.8 billion, $1.5 billion, 15.1%, $1.3 billion, 27.7%
UPS, $1.1 billion, $1.1 billion, -4.0%, $1.1 billion, 19.1%
Coca-Cola, $2.7 billion, $2.8 billion, -4.0%, $2.4 billion, 10.8%
Delta Air Lines, $685 million, -$168 million, 507.7%, $1 billion, 73.3%
Aflac, $889 million, $483 million, 84.1%, $675 million, 15.8%
Southern Co., $313 million, $639 million, -51.0%, $1 billion, 2.5%
Genuine Parts, $216 million, $169 million, 28.3%, $190 million, 29.9%
SunTrust Banks, $377 million, $275 million, 37.1%, $383 million, 23.4%
AGCO, $214 million, $205 million, 4.3%, $126 million, 15.2%
Coca-Cola Enterprises, $182 million, $205 million, -11.2%, $208 million, 20.3%
Newell Rubbermaid, $110 million, $112 million, -1.8%, $132 million, 20.5%
Mohawk, $85 million, $73 million, 15.5%, $129 million, 41.5%
NCR, $86 million, $80 million, 7.5%, $91 million, 42.9%
Rock-Tenn, $140 million, $58 million, 140.7%, $185 million, 68.7%
HD Supply*, -$131 million, -$360 million, 63.6%, $2 million, 28.2%
Total, $8.7 billion, $7.2 billion, 20.4%, $8.1 billion, 29.3%
* Home Depot’s second-quarter profit is an estimate because it has not reported earnings yet. HD Supply reported “pro forma” results for the quarters before its June 26 initial public offering.
Notes: Includes all unusual charges and gains. The list excludes Atlanta-based Fortune 500 company First Data Corp., which is owned by private equity firm Kohlberg Kravis Roberts & Co. Its stock is not publicly traded.
Sources: Bloomberg LP earnings reports and consensus of analysts’ estimates.
Before the Great Recession, a recurring debate among market watchers was whether the nation might luck into a “Goldilocks” economy that was neither too hot nor too cold, but just right.
By some measures, that golden time seems to be now for Georgia’s biggest companies.
Despite four years of sluggish recovery in the wider economy, Georgia’s 15 largest publicly-traded companies have been enjoying cozy conditions, with the average firm posting double-digit profit growth and stock gains.
As a group, the companies’ profits were up 20.4 percent in the latest quarter compared to a year ago, well ahead of the 2.6 percent profit growth reported so far by firms in the Standard & Poor’s 500 index.
Likewise, the Georgia corporations’ stock prices are up nearly 30 percent on average since Jan. 1, far out-distancing the S&P 500 index’s nearly 19 percent rise.
To a large extent, experts said, the Georgia’s companies’ market-topping performance relates more to the particular industries they’re in — and when they started to rebound from the recession — than it does to geography. For global firms like Coca-Cola and UPS, “you would expect their performance to have less to do with where they’re located” than how they’re affected by national or international trends, said Mercer University economist Roger Tutterow.
Some of those trends, he said, may have been particularly favorable to Georgia’s mix of companies.
“We’re now entering the fifth year of the recovery,” said Tutterow. That many years after a recession ends, he said, the economic recovery’s benefits typically have spread to a broad range of industries and employers, including companies that were hardest-hit during the recession.
Indeed, such Georgia firms were among the strongest performers during the second quarter, he noted.
Rebounding new housing construction helped generate profit growth of more than 15 percent in the second quarter at flooring maker Mohawk Industries and, according to analysts estimates, at home improvement retailer Home Depot, which reports on Aug. 20.
Home Depot’s shares are up about 30 percent, while Mohawk’s have jumped about 40 percent.
Both companies were hurt during the Great Recession, when the real estate crash withered the firms’ financial results.
Likewise, SunTrust Banks was among the many banks that participated in a federal bailout during the financial crisis. But the Atlanta bank reported a 37 percent increase in second-quarter profits over the previous year, to $377 million. Its stock has gained almost 24 percent this year.
SunTrust has benefited from “really strong expense control,” as well as slowing write-downs of problem loans, noted Marcus Griffin, chief investment officer at Glenmore Advisors, an Atlanta firm that oversees investments for wealthy families. He said the bank should also benefit as interest rates rise in the future, as many expect. That’s because long-term interest rates (at which banks loan out money) have begun to rise faster than the short-term interest rates they pay on most deposits and savings accounts.
“We’re seeing companies able to sustain more earnings growth,” said Griffin. That, along with weak overseas economies in Europe and China, should continue to draw investors to the U.S. stock market this year, he said.
“From a global perspective, the U.S. market is being seen as the strongest market” among the world’s developed nations, he said.
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