No. of Recommendations: 14
However, beside insurance business and investment income, the operating earnings is actually down 8.4% due to problems in railroad, utility & energy. And those problems may not get better.
It has been going on for a while.
Eyeballing the rolling-year real after-tax earnings separately in rails and in utilities, I tried to estimate what the "old conservative" numbers might look like.
i.e., what would a conservative cyclical adjustment level look like if the current dip turns out to have been transient.
For rails I took the lowest rolling year real figure ending from 2019-Q2 to 2022-Q4.
For utilities I took the lowest rolling year real figure ending from 2020-Q4 to 2023-Q1. Shorter period because until recently there was a strong up-trend.
The total of those two, in end-2023 dollars, would come out to $9.667bn as the "old conservative normal". The current figure is $7.418bn, having slid each of the last 8 quarters, and accelerating recently.
If the 2023 earnings in each of those groups were as high as those old "recent worst" numbers, the 2023 net on those two would have been $2.25bn higher. If valued at a multiple of 15, each share would be worth $23400 more today.
It's not a small problem. And as you note, it's hard to say with confidence how transient it will be.
Jim
