LPL Research analyzes S&P 500 margin expansion, assessing how much is structural versus cyclical and what that means for future earnings forecasts.
Should the recent value rotation be viewed as a regime shift-driven change in market preference, or a simple reversal trade? We think there is a compelling case to be made for the former. In a regime of higher interest rates and stubbornly above-target inflation, the market is increasingly focused on capex intensity, free cash flow conversion, and the cost of capital.
