ValuationFrom SEC filings · 200 companies · updates as each 10-Q lands
Did the Market Rise Because Companies Earned More, or Because You Pay More?
A company's market value is its revenue, times the share of that revenue it keeps, times what the market pays for each dollar kept. Those three multiply back to the whole exactly, so splitting a rise between them is a measurement and not a model. Read it beside the Market P/E Ratio, which says what the market costs; this says how it got there.
Latest read
Over the five years to June 28, 2026 the 197 companies in the base grew their market value 2.08×. Revenue accounts for 65% of that rise and wider margins for 56%, while the multiple contributed −22%: investors are paying less per dollar of earnings than five years ago, not more. The market did not re-rate. It earned. Net margin is 15.2%, against 9.5% in 2011, and that widening is doing more of the work each year — 70% of the last twelve months against 19% across the whole record. The gain is broad rather than a few winners: 190 of 198 companies are profitable, the highest share since 2011. Whether 15%-plus margins hold is now the question that matters more than the multiple.
Sources, methodology & freshnessLast updated 2026-08-25 · Open ↓Close ↑
Source
SEC EDGAR XBRL filings for the covered companies — revenue and net income from the statements, share counts from filing cover pages — joined to our daily price data
Methodology
Market value decomposed as revenue × net margin × multiple, an exact identity; contributions measured as log shares so a driver that fell reads negative; every leg computed over the companies with both revenue and earnings known at the date
Updates
Rebuilt every day in the pipeline; the fundamental legs change as each 10-Q and 10-K landsLast: 2026-08-25
Maintained & reviewed by Yuriy Matso — methodology shown on the page.
What moved it5 years · exact split
EARNINGS
122%
of the five-year rise came from the business; the multiple contributed −22%
1Y
−17%
re-rating
3Y
9%
re-rating
5Y
−22%
re-rating
Since 2011
27%
re-rating
Net margin 15.2%, from 9.5% in 2011. 190 of 198 companies profitable. The multiple is the smallest of the three drivers, and over five years it worked against the market.
Reading the split
- Shares can exceed 100%. The drivers compound rather than add, so they are split in logs. When one leg goes backwards it takes a negative share and the others sum past 100 — which is exactly what a falling multiple looks like.
- Margins are the swing factor. Revenue growth is steady across every window. What changes is how much of it companies keep.
- This is not a forecast. A margin that widened for a decade can narrow, and it would pull earnings down without any change in the multiple.
Net margin
15.2%
was 9.5% in 2011
Profitable
190/198
8 losing money
Revenue, 5y
×1.62
65% of the rise
Margin, 5y
×1.51
56% of the rise
Multiple, 5y
×0.85
−22% of the rise
Market cap, 5y
×2.08
15.8% a year
01
The exact split, by window
| Window | Market cap | Revenue | Margin | Multiple | Per year |
|---|---|---|---|---|---|
| 1Y1.0y | ×1.24 | ×1.1148% | ×1.1670% | ×0.96−17% | 23.8% |
| 3Y3.0y | ×1.97 | ×1.2938% | ×1.4353% | ×1.069% | 25.3% |
| 5Y5.0y | ×2.08 | ×1.6265% | ×1.5156% | ×0.85−22% | 15.8% |
| 10Y10.0y | ×5.74 | ×2.3950% | ×1.6428% | ×1.4622% | 19.1% |
| Since 201115.3y | ×11.20 | ×3.6253% | ×1.6019% | ×1.9427% | 17.2% |
Every row multiplies back exactly: revenue × margin × multiple equals the market-cap column. The multiple is the only driver that has gone backwards, and it has done so over both the last year and the last five. Over the full record it still added 27%, so the re-rating that happened belongs to the 2010s and not to the recent market.
02
Net margin
Range:
03
How many companies actually make money
Range:
04
Revenue and the multiple, indexed
Range:
Range:
05
Method
the identity
Market cap = revenue × (earnings ÷ revenue) × (market cap ÷ earnings). The middle term is net margin and the last is the multiple, so the three legs are exact and leave no residual. Shares are taken in logs because the drivers compound.
one consistent basket
Every leg is computed over the 197 companies whose revenue AND earnings are both known at the date. Summing earnings across the whole base while summing revenue across only the companies that report it would put a different denominator under each leg and overstate the margin — the one number this page exists to get right.
survivorship
The basket is today's largest US companies, and a decomposition is more exposed to that than a ratio: these firms grew revenue faster than the market did, which flatters the revenue leg specifically. The margin and multiple legs are ratios and travel better between baskets. Read the split as a description of these companies rather than of the whole market.
timing
Each quarter enters on the date it was first filed, never on the date it ended, so no window contains a number the market had not yet seen. Values are latest-vintage, placed at their original reporting date.
What moved it5 years · exact split
EARNINGS
122%
of the five-year rise came from the business; the multiple contributed −22%
1Y
−17%
re-rating
3Y
9%
re-rating
5Y
−22%
re-rating
Since 2011
27%
re-rating
Net margin 15.2%, from 9.5% in 2011. 190 of 198 companies profitable. The multiple is the smallest of the three drivers, and over five years it worked against the market.
Reading the split
- Shares can exceed 100%. The drivers compound rather than add, so they are split in logs. When one leg goes backwards it takes a negative share and the others sum past 100 — which is exactly what a falling multiple looks like.
- Margins are the swing factor. Revenue growth is steady across every window. What changes is how much of it companies keep.
- This is not a forecast. A margin that widened for a decade can narrow, and it would pull earnings down without any change in the multiple.
How Market Return Drivers Works
- 1Start from an identity rather than a modelA company's market value equals its revenue, times the share of revenue it keeps as profit, times what the market pays per dollar of profit. That is arithmetic rather than theory: the three terms multiply back to market value exactly, with no residual to explain away.
- 2Aggregate the basket before dividingRevenue, earnings and market value are summed across the companies first, then divided. Every leg is computed over the companies whose revenue and earnings are both known on the date, so one basket sits under all three and the margin cannot be inflated by a mismatched denominator.
- 3Split the change in logsThe drivers compound rather than add, so their shares are taken as logs of the ratios. That lets a driver which moved backwards take a negative share while the others sum past one hundred, which is exactly what a falling multiple looks like and is hidden by any method forced to sum to one hundred.
- 4Check whether the gain is broadA widening margin can mean every company improved or a few enormous ones did. The share of companies earning anything at all over the trailing year is published beside it, which distinguishes the two.
Who Uses Market Return Drivers
Anyone told the market is only multiple expansion
The claim is testable and, for this basket over the last five years, false: the multiple fell while the market doubled. The split says how much of any rise is business performance and how much is repricing, for whichever window is being argued about.
Investors weighing what could go wrong
If a rise came from margins, then margins are the risk. This page relocates the question from whether the multiple is too high to whether the profitability behind it is durable.
Readers of the P/E page
A multiple says what the market costs. This says how it got there, which is the immediate next question and one a ratio alone cannot answer.
People comparing eras
The same split over one, three, five and ten years shows when the re-rating actually happened. In this record it belongs to the 2010s, not to the recent market.
Pro Tips
01
Shares over one hundred are the signal
When revenue and margins together account for more than the whole rise, the multiple worked against the market. That is more informative than any figure that has been normalised to sum neatly.
02
Watch which leg is accelerating
Revenue growth is the steadiest driver across every window. Margins are the swing factor, and their share of the move has climbed as the windows shorten.
03
Margins mean-revert more than revenue does
A revenue line rarely falls without a recession. A margin can narrow on competition, wages or input costs alone, and it would pull earnings down with no change in the multiple at all.
04
Survivorship hits the revenue leg hardest
The basket is today's largest companies, which grew revenue faster than the market did. The margin and multiple legs are ratios and travel better between baskets; the revenue share is the one to discount.
Common Issues & Solutions
The driver shares add up to more than 100%▾
That is intentional and it means one driver moved backwards. The shares are log contributions, so a multiple that contracted takes a negative share and the other two exceed one hundred between them.
The margin here differs from a company-level margin I know▾
This is an aggregate: total earnings over total revenue across the basket, so large companies dominate it. It is not the average of company margins, and it will differ from any single name.
The share of profitable companies jumped▾
The basket admits companies when they list, and the 2019 to 2021 cohort arrived unprofitable and has since grown into earnings. Part of that recovery is real improvement and part is composition, which the page states rather than smooths.
The full-record split disagrees with the five-year split▾
Both are correct for their window. The multiple added to the market across the whole record and subtracted over the last five years, which is precisely the finding: the re-rating happened earlier and has since partly reversed.
Frequently Asked Questions
What drives stock market returns?▾
Three things, and they multiply: how much revenue companies generate, what share of that revenue they keep as profit, and what investors pay for each dollar of profit. Any change in market value is exactly the product of changes in those three, which makes the split a measurement rather than an estimate.
Has the market risen on earnings or on multiple expansion?▾
For the largest US companies over the last five years, on earnings. Revenue and wider margins account for the entire rise and more, because the multiple contracted over the same period. Across the full record since 2011 the multiple did add to returns, so the re-rating people argue about belongs to the 2010s rather than to the recent market.
Why can the driver shares add to more than 100%?▾
Because the drivers compound, their contributions are measured in logs. When one driver moves backwards it takes a negative share and the remaining two sum to more than one hundred. Forcing them to sum to one hundred would hide the most interesting case, which is a market rising while the multiple falls.
What is the aggregate net margin?▾
Total net income divided by total revenue across the basket, so it is weighted by size rather than an average of company margins. It answers what share of every revenue dollar these companies keep, and it has widened substantially since 2011.
Why does the share of profitable companies matter?▾
It separates a broad improvement from a narrow one. If margins widen while fewer companies earn anything, a few large winners are carrying an average. If margins widen while more companies are profitable, the gain is genuine across the basket, which is what this record shows.
Can this predict future returns?▾
No, and it is not built to. It measures what has already happened and separates it into parts. Its use is in locating the risk: a rise built on margins depends on those margins holding, which is a different exposure from one built on a multiple that could compress.
Explore Other Tools
Market P/E Ratio
What the same basket costs today, and where that sits in its own range.
Buyback & Dilution Tracker
The share-count side of returns: what happens to your slice while the business grows.
Market Cap to Profits
The economy-wide version, using national-accounts profits instead of filed earnings.
Bubble Tracker
Where valuation sits against allocation and leverage, on one framework replayed at the 2000, 2007 and 2021 peaks.
Last updated: 2026-08-25