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COWEN & COMPANY FINDS IMPROVEMENT IN COMPANY MARGINS; PREDICTS EARNINGS EXPECTATIONS WILL BE EXCEEDED AS LONG AS ECONOMIC RECOVERY CONTINUES

COWEN & COMPANY FINDS IMPROVEMENT IN COMPANY MARGINS; PREDICTS EARNINGS

EXPECTATIONS WILL BE EXCEEDED AS LONG AS ECONOMIC RECOVERY CONTINUES
 NEW YORK, July 24 /PRNewswire/ -- Sloppy economic growth and the depression of a few key industries masked widespread improvements in company margins for the first quarter, a trend that will persist in the second quarter, according to Cowen & Company's Investment Strategists Richard J. Hoffman and Steven R. Resnick.
 "Investors have rewarded companies well thus far for margin improvements, which is helping to justify a Dow Jones Industrial Average above 3000," Hoffman said in findings released today.
 The study found that all of the companies in the S&P 500 which had increases in their stock price of 20 percent or more, also experienced advances in their net margins (defined as percent change in sales less the percent change in net income).
 "Corporations should take note that investors are keenly aware of the importance that net margins have on a company's balance sheet," Resnick said. "They realize that net margins impact the company's competitiveness in the domestic and foreign arenas."
 The 'microengineering' of margins has been achieved through restructuring/productivity gains, faster new product development and balance sheet re-capitalization. The 'cost of goods' has benefited from lower inflation and interest rates, Hoffman said.
 "These factors support our thesis that earning power remains considerably above current levels," Resnick said. "While second quarter earnings are likely to prove a little disappointing, we don't expect them to be disastrous, and future growth is likely to be stronger."
 Hoffman/Resnick expect that earnings are likely to be exceeded as companies achieve strong flow-through to profits from even modest sales growth. They expect that as the recovery unfolds, depressed groups will participate, and the positive trend in margins will become more obvious.
 The study also found that 62 percent of the companies in the S&P 500 experienced net margin improvements in the first quarter 1992 versus first quarter 1991. The 4.1 percent increase in S&P 500 EPS in first quarter 1992 would have been higher but for the depression of key, heavily weighted industries, such as the oils.
 Hoffman/Resnick estimate the S&P 500's earnings at $24 for 1992 and $29 for 1993, versus $15.97 in 1991.
 Cowen is a privately-held securities and investment banking partnership based in New York City, with research and investment banking offices in Boston and San Francisco. In corporate finance, Cowen is one of the top ten underwriters of equities in the health care and technology sectors. The firm also has a significant presence in correspondent services and asset management. Cowen's more than 1,200 employees serve its institutional and individual clients domestically and internationally through 18 offices in the United States and abroad. Cowen has more than $240 million in revenues and $90 million in capital.
 -0- 7/24/92
 /CONTACT: Surya Shah, 212-704-8172, or Jim Bruni, 212-704-8126, both of Edelman Public Relations, for Cowen & Company/ CO: Cowen & Company ST: New York IN: FIN SU: ECO


AH-LD -- NY002 -- 2929 07/24/92 09:20 EDT
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Publication:PR Newswire
Date:Jul 24, 1992
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