Warren Buffett may have panic sold some stocks — but he's still on top of the S&P 500 in at least one way: Sheer profitability. And he's part of the elite pinnacle of profitability investors are paying up for.
Buffett's Berkshire Hathaway headlines a group of five S&P 500 companies including Apple, Alphabet, Microsoft and JPMorgan Chase that altogether generated nearly $363 billion in profit over the past 12 months, says an Investor's Business Daily analysis of data from S&P Global Market Intelligence and MarketSmith. That works out to $1 billion in profit — a day. It's also more than other group of S&P 500 companies earned — and is a staggering $42 million in profit every hour.
Big profits matter to S&P 500 investors now. Massive profitability is the ultimate security blanket as fears of a slowing economy, and rising Covid-19 infections, heat up. Shares of the five most profitable S&P 500 companies are up an average 30% this year. That's nearly twice the S&P 500's 18.8% year-to-date gain.
Who's on top in terms of profit? Buffett's Berkshire Hathaway. The company pulled down $105.8 billion in net income excluding extraordinary items in the past 12 months. That's an astounding $12.2 million of profit every hour, $294 million a day and $8.8 billion a month. That's even 20% more than the $241 million a day in profit Apple, the No. 2 most-profitable firm, churns out.
Investors Hinge On S&P 500 Profits
Solid profits give investors courage to shrug off a flurry of worries that continue to plague the S&P 500. Worries about growing Covid-19 infections, inflation and tax changes prompted stocks to suffer a five-day slide last week.
Profit continues to be the S&P 500's saving grace. Analysts are already expecting S&P 500 companies to post 27.9% higher profit in the third quarter, says John Butters, earnings strategist at FactSet. And if that's right, it would mark the index's third-highest quarterly earnings growth since the third-quarter of 2010.
Analysts are scrambling to up their forecasts, too. Consensus estimates for third-quarter profit is up 3.7% just since June 30, Butters says. But clearly, a handful of companies are the driving forcing behind the S&P 500's sheer profit.
Berkshire Hathaway's Quiet S&P 500 Profit Engine
Where's the bulk of S&P 500 coming from? Big S&P 500 tech companies might grow faster, but Berkshire Hathaway is churning out profit like none other.
No other S&P 500 company came anywhere near Berkshire Hathaway's sheer profit prowess. Not even Google parent Alphabet can match Berkshire Hathaway's bottom line. Alphabet earned $62.9 billion in the past 12 months, or $7.3 million an hour and $175 million a day. That's 40% less than Berkshire Hathaway's haul.
Berkshire Hathaway didn't just crank out more profit in the past 12 months than any S&P 500 company, it's still revved up. Analysts think it will earn an adjusted $11.83 a share on its class B shares in fiscal 2021, up 29% from the same year-ago period. Shares of Berkshire Hathaway are up more than 20% this year so far.
It's also important to point out, though, that analysts calculate Berkshire Hathaway's results multiple ways due to the complexity of its business.
For earnings estimate comparisons, analysts make further adjustments, says S&P Global Market Intelligence. Further tweaks for year-to-year comparisons brings Berkshire Hathaway's profit the past 12 months down to $82.5 billion. And making further adjustments for forecasting, analysts say Berkshire Hathaway made $21.9 billion in 2020. Should you buy Berkshire Hathaway stock now?
How Apple And Alphabet's Profits Compare
Apple's profits are much more straightforward than Berkshire Hathaway's. It earned $86.8 billion excluding extra items in the past 12 months. And that amounts to $7.2 billion a month, $241 million a day or $10 million an hour. That's still less than Berkshire Hathaway on the same basis, though. Should you buy Apple stock now?
Alphabet is behind but still a veritable money machine, too. But it still turn in a profit of $62.9 billion in the past 12 months. That's $5.2 billion a month, $174 million a day or $7.3 million an hour. Investors appear to like what they see, pushing Alphabet's stock up more than 60% this year.
And when you own an S&P 500 stock making that much profit a day, you can afford to hold on if the market has a bad week. That's what investors, it seems, are betting on.
Who Makes The Most Per Hour In The S&P 500?
| Company | Ticker | Stock YTD % ch. | Adjusted net income past 12 months ($ millions) | Profit / month ($ millions) | TTM profit / day ($ millions) | Profit / hour ($ millions) | Sector |
|---|---|---|---|---|---|---|---|
| Berkshire Hathaway | 20.2% | $105,777 | $8,814.75 | $293.8 | $12.2 | Financials | |
| Apple | 12.3 | 86,802 | 7,233.50 | 241.1 | 10.0 | Information Technology | |
| Alphabet | 60.8 | 62,929 | 5,244.08 | 174.8 | 7.28 | Communication Services | |
| Microsoft | 33.0 | 61,271 | 5,105.91 | 170.2 | 7.09 | Information Technology | |
| JPMorgan Chase | 23.8 | 46,058 | 3,838.16 | 127.94 | 5.33 | Financials | |
| Total | 362,837 | 30,236 | 1,007 | 42.0 |
