S&P 500 Firms Hoard Cash As CAPEX Declines

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S&P 500 Firms Hoard Cash As CAPEX Declines

A March 19th report from FactSet Insight points out that cash and short-term investments among firms in the S&P 500 (ex-financials) came to $1.43 trillion at the end of the fourth quarter (12/31), a record-high balance for the iconic stock index. Of note, the prior record cash balance was $1.41 billion in the fourth quarter of 2013.

S&P 500 cash balances by sector

At the sector level, six sectors saw a year-over-year increase in cash balances, with the Consumer Staples and Health Care sectors showing the largest increases. Four sectors reported a decrease in cash balances, notably the Telecom Services sector.

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Consumer Staples saw the largest increase in cash balances in the fourth quarter at 18.7%. It also had the fifth highest quarter-end cash balance at $112.8 billion. Walgreens Boots Alliance was the biggest contributor to the increase in cash. The newly combined company saw an $11.9 billion increase in cash compared to last year. Other companies in the sector that boosted cash significantly were Sysco Corporation at +$4.5 billion and Procter & Gamble  at +$3.7 billion.

S&P 500

The Health Care sector saw the second-highest move up in cash balances for the fourth quarter at 18.0%. It also had the second highest cash balance at $237.1 billion. Gilead Sciences was the largest contributor to the increase in cash, as the firm reported an $8.0 billion boost in cash compared to last year. Other companies in the sector with much larger cash balances included Amgen at +$7.6 billion and the Becton, Dickinson and Company at +$6.3 billion.

The Telecom Services sector witnessed the biggest decrease in cash balances for the fourth quarter at -62%. The sector also reported the lowest cash balance at $23.1 billion.

S&P 500

S&P 500 capex to decline in 2015

On a forward 12-month basis (as of the  end of Jan.), capital expenditures for S&P 500 firms (ex-Financials) are projected to drop by 3.4%. Four sectors are anticipated to see a year-over-year decline in capex over the 12 months, led, not surprisingly,  by the Energy sector (-13.5%). The three other sectors projected to see year-over-year capex decreases are Telecom Services (-4.5%), Utilities (-2.5%), and Materials (-1.4%). The FactSet report also notes that six sectors are anticipated to report year-over-year increases in capex, especially the Information Technology (+6.3%) and Health Care (+5.2%) sectors.

Of note, capital expenditures for S&P 500 firms are projected to be up 6.0% year-over-year to $183.9 billion in the fourth quarter of 2015.

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