Value of Michigan’s largest public companies dropped by over $120B in 2022
- Michigan’s largest public companies struggled with the stock market, with over 40 percent losing more than the 19.4 percent drop in the S&P 500
- Despite the tough year, four companies finished with higher stock prices
- The declines affected a range of industries, from automotive to financial services to consumer goods, such as footwear
Michigan’s 12 largest public companies lost at least $120 billion in stock value during 2022, as a tumultuous trading year ended — after 12 months of high inflation and economic uncertainty — with the stock market’s worst annual performance since 2008.
Billions more were lost among another nearly two-dozen Michigan-based companies that were valued at $1 billion or more at the start of 2022.
A Bridge Michigan analysis of Michigan-based stock data shows that just over half of the state’s largest publicly traded companies fared worse than the Standard & Poors 500 Index market benchmark, which fell 19.4 percent last year.
They include leading U.S. automakers General Motors and Ford Motor Company, both of which lost nearly half of their value as each fought to overcome supply chain constraints while converting their fleets to EVs.
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Among the companies that did better than the S&P 500 barometer, four — led by West Michigan grocer SpartanNash — ended up in positive territory for 2022.
The year was complicated: Costs for higher wages, supplies and transportation all cut into business balance sheets over the past year. The value of the U.S. dollar against foreign currencies impacted companies with operations and suppliers overseas. And interest rates climbed as the Federal Reserve acted aggressively with its monetary policy to stem inflation.
The new year is starting with expectations that the country could see a recession in 2023, though it’s likely to be mild, economists say. However, over the coming year, the economic cool-down “will actually result in a loss of jobs and increase the unemployment rate,” Donald Grimes, University of Michigan economist, said during a presentation in December.
Michigan could be insulated from the downturn by pent-up demand for new vehicles, Grimes said, describing a scenario that should help the state’s automakers — and, possibly, their stock values.
General Motors is the state’s second-largest publicly traded company, behind medical device maker Stryker of Kalamazoo, while Ford is its third-largest.
Both auto giants saw dramatic declines in their stock value: GM fell 45 percent, while Ford declined 47 percent, drops that, combined, erased almost $80 billion in value for two of the state’s flagship businesses.
Ford reported earnings of $1.8 billion in the third quarter, down 40 percent from a year earlier. Its quarterly revenue was $39.4 billion, up 10 percent from the previous year, the company said, despite supply chain issues.
The automaker said the earnings decline stemmed from supply shortages that left about 40,000 vehicles built but awaiting parts and about $1 billion in higher-than-expected supplier payments.
The company expressed hope that many of the inventory issues would be resolved by the end of its fourth quarter in December 2022.
GM, meanwhile, recorded record third-quarter revenue of $41.9 billion.
CEO Mary Barra told investors in a letter in October that the company’s move to a full electric vehicle platform is under way, and noted that it managed supply chain issues well enough to retain sales leads in full-size SUVs.
“Demand continues to be strong for GM products and we are actively managing the headwinds we face,” Barra said.
Goldman Sachs investment bank predicts flat returns from the S&P 500 Index in 2023, alongside flat stock earnings, according to a report from November.
Meanwhile, here are other insights into last year’s stock performance among the state’s 33 largest public companies. Of them, all but one — Kelly Services — had market caps of $1 billion or more at the start of 2022:
Four large Michigan public companies finished the year with stock value gains
Grocer SpartanNash (NASDAQ: SPTN), with a market cap of $1.1 billion, ranks among the smaller of the state’s publicly traded companies, but it came in first among them when it comes to adding value in 2022. Its stock value grew 20.8 percent.
The Grand Rapids-based company said sales increased 10 percent in the third quarter, though earnings fell 36 percent. At the same time, the company cut its supply chain expenses, and in early November raised its full-year outlook even as inflation costs also increased.
The company said its stores, which include the Family Fare and D&W Fresh Market brands, saw 8 percent growth in the third quarter, and its wholesale sales of Spartan brands grew amid supply chain reorganziation.
Behind SpartanNash was auto electronics supplier Visteon, with a 15.2 percent gain to a market cap of $3.7 billion. The Belleville-area company recorded $5 billion in new contracts related to EVs in the first three quarters of the year, it told investors in its third-quarter report.
Kellogg Co., at 10.5 percent stock growth for 2022, benefitted from a return to full production after a strike and plant fire in 2021. The company also announced it would be splitting into three separate companies and moving its flagship snack headquarters from Battle Creek to Chicago, moves that appeared to please investors, who also anticipate a stock split as the deal is finalized by the end of this year. At year-end, the company was valued at $24.4 billion.
The fourth company with a gain in stock value was Bloomfield Hills-based Penske Automotive, at 8.9 percent. The gain boosted its market cap to $8.1 billion, and the growth was credited to a 29 percent increase in commercial truck sales revenue even as auto sales revenue declined by 3 percent. Also boosting the company in the third quarter was its share in 15 percent growth in Penske Transportation Solutions truck leasing.
Utilities were a positive U.S. sector, but flat in Michigan
Michigan’s two large publicly traded utilities saw their stock prices stay flat in 2022, even as the U.S. utility sector was relatively strong in 2022, according to national investor analysis.
“Investors typically flock to utility stocks during periods of economic uncertainty due to their stable revenue and high dividend yields,” said Morningstar investment consultants in September.
The Inflation Reduction Act, passed in August, and COVID-19 relief funding drove clean energy investment in 2022, further making utilities look favorable to investors, according to Morningstar.
However, the stock sector is described as interest-rate sensitive. The typical value gain on utility stocks was about 5 percent in fall 2022, but the ongoing increase in interest rates affected how investors viewed them, according to reports. Returns on treasury bonds, for example, compare favorably to many utility stock investments.
At DTE Energy, which had a $23.1 billion market cap at year-end, operating profit declined 6.8 percent in the third quarter. However, Detroit-based DTE is on track to reach annual earnings per share of $6 by year-end, the utility reported in November.
Consumers Energy, based in Jackson, saw its stock decline by 0.8 percent in the third quarter. That left it with an overall market cap of $18.6 billion, compared to $18.8 billion a year earlier. By the end of the third quarter, it had raised its full-year outlook to $2.89 in earnings per share, up 6 to 8 percent, due in part to a 2.7 percent YTD increase in industrial electricity sales, including to Hemlock Semiconductor and SK Siltron.
Steepest losses spanned many industries
Neogen, the Lansing-based food safety company, saw its stock decline 65 percent over a year, leaving its market cap at $3.3 billion to start this year’s trading. Its next earnings release comes on Thursday. Revenue increased 3 percent, but other costs — including acquisitions — pressured the bottom line.
Neogen offered a similar outlook to many other industries in its first-quarter earnings report in September.
“We continued to be faced with challenging business conditions, both in terms of a slowing economy, inflationary raw material cost increases, and ongoing supply chain issues. Our results were also adversely impacted by currency headwinds, primarily in Europe,” said Steve Quinlan, Neogen’s vice president and chief financial officer, in a news release.
Also posting a steep decline in its stock price was Rockford-based Wolverine World Wide. The footwear company’s market cap was $800 million at the end of trading in 2022, based on a stock price of $10.77 per share. The company’s 52-week high was $29.75.
Rising interest rates hit financial service companies, with many laying off staff as the business dried up. Investors also turned away from them, with the value of Detroit’s Rocket Companies dropping by 52.6 percent over the past year and Ally Financial, also based in Detroit, posting a 49.9 percent decline.
Besides General Motors and Ford, automotive declines were posted by the Shyft Group of Charlotte, a commercial truck outfitter that saw its stock value dip 49 percent, and Nexteer Automotive, a steering systems company based in Saginaw that posted a 47 percent decline in stock value.
Brands more familiar to consumers that posted among the steeper declines included MillerKnoll furniture (-47 percent), Steelcase office furniture (-39.5 percent), Whirlpool appliances (-38.5 percent), and La-Z-Boy furniture (-37.2 percent) and Domino’s, (-36.8 percent).
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