Wages are on the rise, with average hourly earnings jumping 5.2% in the 12 months through May.<\/p>\n
Employee compensation, of course, is a major part of corporate costs. And rising costs can depress a companys earnings. You might want to think twice about buying the stock of a company whose wage costs are cutting into profit.<\/p>\n
Wage inflation is a big risk to earnings, especially for labor-intensive businesses, Bank of America strategists wrote in a commentary. They ranked S&P 500 companies by how labor intensive they are, measured by number of employees per $1 million of sales. <\/p>\n
Here are the top 10. The statistic next to the name of the company is its number of employees per $1 million of sales.<\/p>\n
1. Royal Caribbean (RCL) - Get Royal Caribbean Group Report, the cruise company: 55.3.<\/p>\n
2. Norwegian Cruise Line (NCLH) - Get Norwegian Cruise Line Holdings Ltd. Report, the cruise company: 53.5<\/p>\n
3. Robert Half (RHI) - Get Robert Half International Inc. Report, a recruiting firm: 27.9.<\/p>\n
4. Hilton Worldwide (HLT) - Get Hilton Worldwide Holdings Inc. Report, the hotel company: 24.5.<\/p>\n
5. Cognizant Technology Solutions (CTSH) - Get Cognizant Technology Solutions Corporation Report, a technology consulting company: 17.9.<\/p>\n
6. Darden Restaurants (DRI) - Get Darden Restaurants Inc. Report, a restaurant owner, including Olive Garden: 16.9. <\/p>\n
7. EPAM Systems (EPAM) - Get EPAM Systems Inc. Report, a software engineering company: 15.7.<\/p>\n
Scroll to Continue<\/p>\n
8. Starbucks (SBUX) - Get Starbucks Corporation Report, the caf chain: 12.6.<\/p>\n
9. Chipotle Mexican Grill (CMG) - Get Chipotle Mexican Grill Inc. Report, the fast-casual restaurant chain: 12.5.<\/p>\n
10. Carnival (CCL) - Get Carnival Corporation Report, the cruise company: 11.4.<\/p>\n
Morningstar analyst Jaime Katz assigns the company no moat and puts fair value for the stock at $80. It recently traded at $34.<\/p>\n
As travel constraints and hesitancy surrounding covid-19 continue to recede, consumer behavior about travel and social distancing have returned to normal for Royal Caribbean, paving a path to positive profits for the business, Katz wrote in a commentary. <\/p>\n
With virus restrictions largely in the rearview mirror, Royal should see modest pricing gains as it digests bookings paid for with future cruise credits and takes new reservations, Katz added. <\/p>\n
On the cost side, some health protocols and cruise resumption costs could inflate near-term spending, which could temper profitability until 2023.<\/p>\n
Morningstar analyst Joshua Aguilar gives the company a narrow moat and puts fair value for the stock at $88. It recently traded at $78.<\/p>\n
Robert Half will remain as one of the leading global staffing firms in a highly fragmented industry, he wrote in a commentary. The company places skilled professionals in accounting, finance, and information technology. <\/p>\n
Further, we think its hold on small to mid-size businesses will persist, given its ability to fill open roles quickly, and the willingness of these businesses to sign exclusive contracts, Aguilar said. <\/p>\n
We believe this will yield greater profitability for Robert Half, despite operating in a highly cyclical industry.<\/p>\n
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See the original post here:<\/p>\n
Royal Caribbean Probably Doesn't Want to be on This List - TheStreet<\/a><\/p>\n","protected":false},"excerpt":{"rendered":" Wages are on the rise, with average hourly earnings jumping 5.2% in the 12 months through May. Employee compensation, of course, is a major part of corporate costs. And rising costs can depress a companys earnings Continue reading