Earnings Matter

Over the long run, earnings drive stock prices. When considering a stock, it is important to understand the company and how its earnings are generated. This is demonstrated by looking at the difference in earnings of two energy companies: Exxon Mobil and Energy Transfer. Today, operating margins for the S&P 500 are coming off an all-time high and are 25% higher than their long-term trend line. The story for 2023 will be earnings and operating margins.