Only One Sector Has Experienced A True Earnings Recovery

We’ve written before about how the “earnings recovery” in U.S. equity markets is an illusion. Accounting earnings may have rebounded from 2015 lows, but economic earnings—which reverse accounting distortions and account for the weighted average cost of capital (WACC)—remain in a persistent downturn. 

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  • Sohrab Alborzian

    January 12, 2018

    Procter & Gamble (PG) has grown net income by 38% since 2013 while economic earnings are down 24%, which explains why it’s been targeted by activist investor Nelson Peltz.

    If earnings are down why does it make sense that Peltz is targeting it? I didn’t understand that part, any help would be appreciated

  • Sam McBride

    January 16, 2018

    Peltz likes to target underperforming companies that could improve their profitability through superior management. P&G’s declining economic earnings are a potential sign of mismanagement.

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