The Black (Red?) Hole Where Sales Used to Be

According to the S&P, S&P 500 sales are expected to decline by over $1.5 Trillion in Q3 from a year ago. Let’s take a closer look.

 

A Review of Q2 Revenues

First, how bad was Q2? In a word: Very. The overall revenue shortfall in Q2 according to the S&P is close to 20%. The worst in recent history.

Here are the top 10 companies with the greatest revenue declines in Q2 2009:

Most of them are oil and US auto companies (GM would have been on this list too, but doesn’t exist as a public company anymore). Over half of the S&P 500 posted double-digit revenue declines.

Double-Digit Revenue Growth during the Recession?

An interesting question is which companies actually grew revenues during this recession? Quite a number it turns out. Over 1/5 of the S&P companies reported positive revenue growth in Q2 2009. Some (i.e. the banks) were due to a rebound from 2009 lows. Here are the top 10 companies by revenue that posted both double-digit Q2 2009 and annual 2008 revenue growth:

It’s a surprisingly large list (with 31 companies in all).

A Peek at Q3 Revenues

S&P predicts a revenue Q3 shortfall of over 14%. The actual Q3 reports are just starting to come in. Only 11 reports are available so far:

All 11 companies report a shortfall, averaging an 11% decline (based on total revenue). It doesn’t look like the numbers will be far off from the prediction.

 

What To Do?

Since revenues are going to be bad in Q3 (if only less bad than Q2),

a quick and sustainable market recovery is unlikely. However, the numbers show that are are many companies that appear immune to the recession. Any company able to sustain revenue growth should in theory benefit from lower costs. Those are the companies worth investigating further.