Q1 Earnings Still Looking Fair

Another week, another burst of earnings analysis from the famed Calcbench Earnings Tracker. We now have Q1 2025 earnings data from more than 3,400 non-financial firms — and taken altogether, it’s hard to find fault with most of the big picture.

See Figure 1, below. Net income, revenue, operating cash flow, capital expenditures, and assets were all up for Q1 2025 compared to the year-ago period; can’t complain about that. 

Now onto the less pleasant stuff. First, cash is a mere 0.6 percent higher this quarter than one year ago. That’s not welcome right now, with recession fears circling like seagulls at the beach. Cash is always important in a recession. 

Second, notice that companies’ cost of revenue is up 4 percent — not so far behind overall revenue, up 4.7 percent. This is the second week running that we’ve seen cost of revenue within spitting distance of revenue. If tariffs or other pressures push cost of revenue up even further, that could drive companies to raise prices on their finished goods and re-ignite inflation. Walmart ($WMT) raised exactly that fear in an earnings statement this week, so watch this issue. 

Also note that 17.2 percent jump in net income. It might sound like a brisk jump, but beware! Roughly $26 billion in net income this quarter was attributed to non-recurring items. If you strip those numbers out, net income only grew 9 percent — not bad, but certainly not 17.2 percent.

Balance Sheets Stronger

We also continue to be fascinated by the overall balance sheet of corporations these days. 

In last week’s earnings update, which looked at only 2,000-ish firms, collective book value (total assets minus total liabilities) in Q1 2025 was 8.3 percent higher compared to Q1 2024. 

This week, with some 1,400 more firms added into the sample, book value is even higher: 8.49 percent. (This also means average stockholder equity is also up $247 million from one year ago.) See Figure 2, below.

So even though total cash is flirting with red ink, and presumably lots of individual firms have worse balance sheets — at the biggest of big pictures, the overall state of Corporate America is still good. A stronger balance sheet means a company is better positioned to weather economic difficulties that might arise. Calcbench will conduct a deeper analysis of balance sheet health next week.

Calcbench tracks these earnings using our Earnings Tracker template, which pulls in financial disclosures as companies file their latest earnings releases with the Securities and Exchange Commission. The Earnings Tracker provides an up-to-the minute snapshot of financial performance compared to the year-earlier period.

If Calcbench subscribers wish to get their hands on the template we use for this analysis, so you can conduct your own experiments at home, use this link to the file. 

Please note that it will only work with an active Calcbench subscription. If you need an active subscription (and who doesn’t, really, when swift access to real-time data is so important?), contact us at info@calcbench.com.