That’s why consumer dread is likely to recede as business forecasts become reality.
Tyson Foods Inc., the meat-packing giant based in Springdale, Arkansas has seen its gross margin widen to 14% from 12% during the past three years, enabling the chicken processor to turn $100 of revenue into $14 of profit after the cost of raw materials, labor and other production expenses, according to data compiled by Bloomberg. By this measure, Tyson has become the most profitable since 2000 with the scale of its sales growth exceeding its costs from inflation.
Ravi Saligram, CEO of the Atlanta-based retailer Newall Brands, which includes Rubbermaid, Mr. Coffee and Yankee Candle, told shareholders on Feb. 11, “I am proud of the way our team has navigated through a difficult operating and inflationary backdrop, delivering more than 12% growth in both core sales and normalized operating income.”
Corporate America, by some measures, is the healthiest it's ever been. Even with record borrowing in recent years, the total debt to asset ratio of the companies in the S&P 500 declined to 23.5%, about the lowest in three decades and well below the average debt to asset ratio since 1990 of 31.2%, according to data compiled by Bloomberg. At the same time, total earnings per share of the S&P 500 jumped to a record-high $191, more than double its $95 at the end of 2020, according to data compiled by Bloomberg.
No wonder Standard & Poor's upgraded 1,130 corporate bond issuers in the U.S. during the past 12 months and downgraded only 543 of them. The ratio, including 2.3 upgrades in so-called high-yield junk bonds for each downgrade, is the highest in at least 10 years.
Whatever happens in 2022, it's unlikely CEOs will have too much difficulty getting through it.
--With assistance from Shin Pei.
Matthew Winkler, editor-in-chief emeritus of Bloomberg News, writes about markets.
This column was provided by Bloomberg News.