Data Update 7 for 2018: Profits, Excess Returns and Value

In this session, I first look at the profitability of publicly traded companies around the world, using a range of profit margins. I thin look at the returns that companies generate on their existing investments, using accounting returns, and compare them to the cost of capital with a singular question. Do companies generally earn more, about equal to or less than their cost of capital? I find that not only do 60% of all companies earn less than their cost of capital, the problem cuts across companies in different geographies, size classes and growth classes. Put simply, growth in most companies is a value destroyer. Slides: http://www.stern.nyu.edu/~adamodar/pdfiles/blog/dataupdate7for2018.pdf Blog Post: https://aswathdamodaran.blogspot.in/2018/01/january-2016-data-update-7-growth-and.html Spreadsheet: http://www.stern.nyu.edu/~adamodar/pc/returncalculator.xls Datasets: 1. Profit Margins, by sector (US): http://www.stern.nyu.edu/~adamodar/pc/datasets/margin.xls 2. Profit Margins, by sector (Global): http://www.stern.nyu.edu/~adamodar/pc/datasets/marginGlobal.xls 3. Excess Returns, by sector (US): http://www.stern.nyu.edu/~adamodar/pc/datasets/EVA.xls 4. Excess Returns, by sector (Global): http://www.stern.nyu.edu/~adamodar/pc/datasets/EVAGlobal.xls Paper Return on Capital, Return on Invested Capital and ROE: Measures and Implications (https://papers.ssrn.com/sol3/papers.cfm?abstract_id=1105499) Learn more about your ad choices. Visit megaphone.fm/adchoices