S&P 500 overseas revenue sits at 28%, Goldman says
Goldman Sachs analysts found 28% of S&P 500 revenue came from abroad last year, with the Nasdaq 100 far more exposed to foreign sales.
By Frankie Delgado · News Reporter
3 min read
S&P 500 overseas revenue made up 28% of the index’s $18 trillion in sales last year, according to Goldman Sachs analysts led by Ryan Hammond, putting a hard number on how domestic the biggest U.S. companies still are.
The Goldman team based its count on last year’s company earnings reports. Their finding: a little more than a quarter of S&P 500 revenue came from outside the U.S., while the rest came from the home market.
Goldman’s regional breakdown showed 9% of S&P 500 revenue came from Europe, the Middle East and Africa. Another 8% came from the Asia-Pacific region.
How much revenue do S&P 500 companies make overseas?
Goldman Sachs put the figure at 28% for last year. That share has not moved much over the past two decades, according to the analysts, though it reached a high of 34% in 2012.
The picture changes by index. Companies in the small-cap Russell 2000 generated 20% of revenue from overseas, Goldman found. The tech-heavy Nasdaq 100 had a much larger foreign sales mix, with 39% of revenue coming from abroad.
That gap helps explain why broad market labels can be misleading. The S&P 500 contains global giants, but Goldman’s numbers show the index still gets most of its sales from inside the U.S. The Nasdaq 100, with its heavy tech weighting, has a much bigger international tilt.
Why is overseas revenue hard to measure?
Goldman said comparing geography across companies is tricky because businesses do not all report sales in the same way. Many companies do not list every country where they sell products or services.
Accounting rules require geographic disclosure only when a country or region represents more than 10% of sales, according to the Goldman analysis. That leaves analysts stitching together partial disclosures across hundreds of companies.
For profits, Goldman used data from the U.S. Bureau of Economic Analysis. That data showed 13% of U.S. profits came from foreign markets.
The analysts noted that the BEA figures include both public and private companies, not just the S&P 500. Even with that difference, Goldman concluded that the foreign share of profits and revenue is broadly similar.
What does the stronger dollar mean for these stocks?
Goldman said companies with more domestic sales have tended to do better when the U.S. dollar strengthens. The analysts said that pattern is playing out now.
Since the end of May, domestic companies have beaten companies with the highest international sales exposure by 5% after adjusting for industry, according to Goldman.
A stronger dollar can weigh on companies with big foreign sales because overseas revenue may translate into fewer dollars. Goldman’s finding suggests investors are already rewarding companies with more of their business tied to the U.S. market.
This story draws on original reporting from MarketWatch.