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OXY - Big Tech Still Dominates Economic Earnings Growth
Occidental Petroleum Corporation
Publicly traded U.S. companies[1] grew reported earnings by 23% in 2018, but economic earnings - the true cash flows of the business - tell a much different story. On the surface, economic earnings grew by 18%. When we remove the impact of the tax cut, they actually declined by 2%, as shown in Figure 1.
Figure 1: Economic Earnings vs. Tax Neutral Economic Earnings
Sources: New Constructs, LLC and company filings.
GAAP earnings don't just mislead investors about the amount of growth in 2018, they also present a misleading picture of the breadth