Sageworks Blog

Sep06

How do private companies stack up against public companies? Mary Ellen Biery [email] Research Specialist

Sep 06, 2012 08:34

Private companies’ profitability has lagged that of public companies in the S&P 500 through the recession and recovery, according to recent data from Sageworks. But private companies took a less drastic hit to sales, on a percentage basis, and saw less compression and less volatility in their net profit margins during that time period. [More]

May10

Concerns cause private companies to delay hiring Mary Ellen Biery [email] Research Specialist

May 10, 2012 09:22

Private companies are too nervous about the future to ramp up hiring, according to a new Sageworks Inc. survey of accountants, bankers and other financial professionals who work closely with these firms. About 32 percent of financial professionals in the survey said their clients aren’t hiring because they are concerned about the economy in general, while another 22 percent said private companies have become more risk averse because of lingering anxiety from the last recession. [More]

Apr30

Does size matter? Sales growth, margins by company size Mary Ellen Biery [email] Research Specialist

Apr 30, 2012 13:20

Privately held companies have a huge impact on the U.S. economy, and new data from Sageworks Inc., a financial information company, shows that sales and margin performance through the recession and so far in the recovery has varied, depending on the size of the company. Data showed that firms with the highest annual revenues in the Sageworks database have seen the sharpest rebound in sales since 2009. Meanwhile, the very smallest firms have seen the biggest improvement in net profit margin since 2009. [More]

Apr25

It wasn't overnight, but private hotels have turned around Mary Ellen Biery [email] Research Specialist

Apr 25, 2012 13:27

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? Mary Ellen Biery [email] Research Specialist

Apr 18, 2012 15:13

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.

Apr04

Taking the pulse: Private nursing care centers Mary Ellen Biery [email] Research Specialist

Apr 04, 2012 12:03

Privately owned nursing care facilities posted lower sales growth than other parts of the health care industry in 2011 and than private companies as a whole, according to Sageworks' analysis of financial statements. [More]

Mar20

Positive economic signs, but confidence lags Mary Ellen Biery [email] Research Specialist

Mar 20, 2012 14:18

Private companies are seeing margins and profits that are higher than they were before the recession, as Sageworks data has shown. But Americans – both consumers and businesses – haven’t yet bought into the recovery in a wholehearted way. Why not? [More]

Mar 12, 2012 13:07

Privately held companies in most major economic sectors have returned their profit margins to pre-recession levels or better, according to a new analysis from Sageworks Inc., a financial information company. [More]

Feb20

Private grocers’ margins unspoiled by higher food prices Mary Ellen Biery [email] Research Specialist

Feb 20, 2012 17:03

Sageworks shows that private grocers and convenience stores generated higher gross profit margins and were able to generate a material increase in adjusted net profit margins for 2011. [More]