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Jul09

(Temporary) Help wanted, apparently - SageworksStats on Forbes.com

June unemployment in the U.S. was flat, and nearly a third of jobs added were in the temporary-help services industry, a field that has shown strong growth over the last 12 months, according to data from Sageworks Inc. “During the last 12 months, privately held employment service firms have seen their revenues grow by almost 20 percent annually, which far outpaces the average annual growth of around 10 percent for private companies across all industries,” said Sageworks analyst Libby Bierman. “That sales growth validates what the employment numbers released this morning showed—the economy has recently been adding a lot of temporary jobs, which are positions that employment service firms routinely fill.” [More]

Jun21

Business booming for IT providers

Facebook’s (NYSE:FB) troubled initial public offering, as well as cautious financial outlooks by tech giants Dell (NASDAQ:DELL) and Cisco (NASDAQ:CSCO) in recent weeks have some traders of technology stocks worrying that the tech boom may be over. But at least for privately held companies involved in computer systems design and related services, business remains strong, according to recent sales and profit margin data from Sageworks Inc., a financial information company. [More]

Jun18

Companies' cash tied up in inventory, slow payers

Later customer payments and slower moving inventory have combined to tie up private companies’ cash 16 percent longer than just three years ago, according to recent data from Sageworks Inc., a financial information company. That’s money companies don’t have in the bank to hire or buy new equipment, even though sales and profit margins this year are up. [More]

May23

Private-company sales, margin growth continue - Sageworks Stats @ Forbes.com

Privately held U.S. companies – the millions of businesses that drive job creation and GDP –are growing sales so far this year at about the same rate as they did for all of 2011, according to new data from Sageworks Inc., a financial information company. Companies across all industries, on average, have generated an 8.1 percent increase in sales so far this year, compared with 8.25 percent growth for all of 2011, based on a financial statement analysis. On a trailing 12-month basis, sales growth has been in the 6 to 8 percent range each month of 2012.  Profitability, meanwhile, has improved year to date for private companies, compared with 2011. The average net profit margin for all private companies was 6.84 percent through May 10, an improvement from the 5.87 percent average margin for all of last year. Net profit margin shows how many dollars of profit a company generates from each $100 in sales. All in all, said Sageworks analyst Samara Zippin, companies continue to generate healthy gains. “Overall, private companies are still doing well, and we’re seeing similar growth trends to last year, while profit margins have improved quite a bit,” she said. “If 2012 continues as it is now throughout the year, I think we’ll see positive trends comparable to 2011.” “The biggest caveat is the unemployment rate,” she said. Unemployment of around 8 percent remains too high, especially considering the U.S. is more than 30 months into the recovery. The fear is that if unemployment doesn’t fall at a faster rate, the economy may bump into the next recession before job growth is healthy. Zippin said it may be that lower costs are behind the margin gains. Indeed, average gross profit margin is higher so far in 2012 than it was, on average, for 2011. Overhead, or sellling, general and administrative expenses, relative to sales has been higher. “It appears that regardless of what sales growth is doing, companies are learning to become more efficient,” she said. Through its cooperative data model, Sageworks collects financial statements for private companies from accounting firms, banks and credit unions, and aggregates the data at an approximate rate of 1,000 statements a day. Net profit margin has been adjusted to exclude taxes and include owner compensation in excess of their market-rate salaries. These adjustments are commonly made to private company financials in order to provide a more accurate picture of the companies’ operational performance. How important are private companies? While Wall Street focuses on the performance of public companies, not all employers in the U.S. contribute to new job creation equally. Out of the 27 million businesses in America, only about 6,200 are publicly traded on listed exchanges. Most others are privately held, and many of them are small businesses. No government agency tracks private company performance by itself. But small businesses, which the government considers to be any company with fewer than 500 employees, drive approximately half of GDP and 65% of new job creation, according to the Small Business Administration. Figures for all privately held businesses, including medium and large private companies, would be even higher, assuming most small businesses (by the government’s definition) aren’t publicly traded. Sageworks’ industry ratios show that over the last 12 months, industries that have had the highest growth rates among privately held companies have included manufacturing, mining, transportation and warehousing, and professional services. Construction, too, has been among the strongest sectors, with roughly 15 percent sales growth over the last 12 months. Health care and social assistance (NAICS code 62) and accommodations and lodging (NAICS code 72) have each generated sales growth that trails the all-industry average over the last 12 months. Nevertheless, sales growth in those sectors has been around 6 percent, outpacing the broader economy. See the entire post on Forbes.com here.

Apr25

It wasn't overnight, but private hotels have turned around

Privately owned hotels have weathered a difficult recession and are back on a profitable path. The industry posted positive net profit margins in 2011 for the first time in three years, and sales increased about 8 percent, according to a financial statement analysis of privately owned hotels by Sageworks, a financial information company. Growth in average revenue per available room, or revPAR, and ongoing expense control seem to have contributed. The sales growth isn’t dramatically higher than the 5 percent increase hotels saw in 2010, but it’s a continued improvement from the 6 percent decline in 2009 among the hotels analyzed by Sageworks. “While hotels saw occupancy levels improve only 4 percent between 2010 and 2011, they were able to increase revenue per available room, or revPAR, by more than 7 percent, which suggests strength in their rates,” said Sageworks analyst Greg Mulholland. “This may be tied to fewer new hotels opening during the recession, which could cause prices to stay high and contribute to the overall sales growth of more than 8 percent. “ Net profit margins for the Traveler Accommodation industry (NAICS 7211) were nearly 7 percent in 2011, following almost breakeven margins in 2010, Sageworks’ industry ratios show. Average margins ranged from negative 2 percent to nearly negative 5 percent in 2008 and 2009, according to Sageworks’ data. Through its cooperative data model, Sageworks collects financial statements for private companies from accounting firms, banks and credit unions, and aggregates the data at an approximate rate of 1,000 statements a day. Net profit margins are adjusted to exclude taxes and owner compensation in excess of their market-rate salaries — adjustments commonly made to private company financials in order to provide a more accurate picture of the companies’ operational performance. “The hotel industry’s profit margins, like those of other industries, suggest there were cutbacks early in the recession, when companies were trying to be as efficient as possible,” Mulholland said. “Now they’re reaping the rewards of that. For example, hotels’ ratio of utility expenses to sales is more than a full percentage point lower than it was last year. That kind of expense control can magnify the impact of higher sales when it comes to the bottom line.” Mulholland said it’s hard to predict what will happen this year, but he noted that the swing to positive margins will mean hotel companies are in a more comfortable position financially. “Where previously everyone was needing to pinch every dollar they could, they may start to feel more comfortable doing things like hiring and expanding, because they’re back to what they consider to be healthy profit margins,” he said. Average industry net profit margins in the two years before the recession were about 2 percent. Hotels.com, the online hotel reservation site, said last month its survey of price paid by customers on its website showed average hotel prices in North America increased 5 percent from 2010, continuing a steady recovery from lows in 2008. Other research and consulting firms have also said they expect gains in revPAR and average daily rates will continue to drive hotel revenues higher in the face of continued, moderate gains in occupancy. Advisory and real estate consulting firm PFK Consulting USA LLC said last month that a limited supply of new hotels coming on line is helping pricing at a time improved productivity is resulting in strong bottom-line gains. PFK expects the amount of new hotels coming on line over the next five years to be lower than the 2.1 percent average increase between 1988 and 2011, which should continue to help pricing. Higher oil prices shouldn’t have a big impact on travel, even though business travelers may be more apt to stay in lower-priced hotels, according to HotelNewsNow.com, a division of Smith Travel Research Inc. Privately held hotels aren’t the only ones benefiting from improving trends. Goldman Sachs analyst Steven Kent raised his rating on Wyndham Worldwide Corp. (NYSE:WYN) to buy from neutral last week, saying the hotel chain stands to gain from an improving U.S. economy, according to published reports. And shares of several publicly traded hotels, including Marriott International Inc. (NYSE:MAR) and Holiday Inn parent company InterContinental Hotel s Group PLC (NYSE:IHG), have outperformed the S&P 500 Stock Index so far this year. See the original post on Forbes.com here.

Apr18

Who's hiring?

Last week's jobs report showed that fewer-than-expected positions were added in March, stoking concern that the economy isn’t growing fast enough. But several industries that have driven a lot of the hiring over the last year continued to add workers last month. Who’s been hiring, and which industries have the kind of business fundamentals that could pave the way for adding more jobs? Manufacturing, health care and food services and drinking places added jobs in March, continuing trends that have helped unemployment rates in related sectors decline since the start of the year, according to data from the Department of Labor. Aerospace manufacturer Boeing Co. (NYSE:BA) and restaurant chain Red Robin Gourmet Burgers (NASDAQ:RRGB) are among publicly traded companies in growing industries that are either hiring or have announced plans to expand. And over the past year, the professional and business services industry has been among the top-hiring areas, even though the unemployment rate has trended higher since late 2011, the data shows. (Unemployment rates for various industries are not seasonally adjusted by the government.) “The likelihood that an industry will be hiring is really a function of the industry’s current and projected sales growth as well as their current profit margins,” said Libby Bierman, an analyst with Sageworks, a financial information company. “If a business isn’t growing its revenues or if its demand is down, then obviously that business is not going to recruit additional employees anytime soon. Likewise, if the business is barely profitable, then any hire that will not lead to a direct increase in sales—like a manager position or any overhead personnel—would be an ill investment.” Sageworks conducted a financial statement analysis of privately held companies in industries that have been adding jobs and found that each of those industries has experienced rising sales and improving profit margins in the last two years. Through its cooperative data model, Sageworks collects financial statements for private companies from accounting firms, banks and credit unions, and aggregates the data at an approximate rate of 1,000 statements a day. Net profit margins are adjusted to exclude taxes and owner compensation in excess of their market-rate salaries. These adjustments are commonly made to private company financials in order to provide a more accurate picture of the companies’ operational performance. “Industries that have been adding jobs at a good rate include manufacturing, professional services and health care,” Bierman said. “Professional services and manufacturing have seen fairly significant sales growth for the last two years in a row, around 10 percent sales growth each year. As companies in these industries grow, it makes sense that they would add to their payrolls to sustain that growth.” Employment services, accounting and computer system design firms are among those within professional services that have added the most jobs over the past year, federal data show. Health care-related industries, on the other hand, haven’t seen high sales growth, Bierman noted. “But they have healthy profit margins,” she said. Net profit margins have been 10 to 11 percent the last two years, compared with about 6 percent for all privately held companies. “Health care industries are better situated to add overhead employees without risking unprofitability,” she said. For job seekers, another important factor to consider in addition to growth and margins is the industry’s current unemployment rate, according to Bierman. For example the unemployment rate (not seasonally adjusted) among construction-affiliated employees is almost double (17.2) the national average (8.4). “With that many other people in the industry vying for a job, any job posting will be flooded with candidates,” she said. See the entire post on Forbes.com here.

Apr10

19 banks stress tested, but what about the rest?

Only 19 of the nation’s roughly 7,400 commercial banks were involved earlier this year in the Federal Reserve’s test of whether the banks could weather a severe recession that included 13 percent unemployment, a 50 percent drop in stock markets and a 21 percent decline in housing prices. But what about customers of the thousands of other banks holding some 40 percent of U.S. deposits? Those banks weren’t part of the Fed’s latest round of stress tests, so are customers worried about the health of their banks? [More]

Mar30

Key cost metrics for hot industries

If you’ve been wondering what fields might be fertile for a new business, a good place to start is the Bureau of Labor Statistics’ new employment projections for 2010 to 2020. Sageworks examined several businesses that entrepreneurs might consider as they look to tap into the trends cited in the government’s employment outlook. [More]

Mar15

Private-company indicator launched in partnership with Fox Business

Tracking the financial performance of privately held companies in the U.S. just got easier.
Sageworks, a financial information company, today announced the release of the Sageworks-Fox Business Private Company Indicator. [More]

Mar08

More like a lamb than a lion, but economy's improving

As March begins, the U.S. economy seems to be running more like a lamb than a lion, despite last week's upward revision of fourth-quarter GDP. Most economists expect slower growth in the current and coming quarters than the 3 percent annual rate in the fourth quarter (vs. an earlier estimate of 2.8 percent). [More]