Depreciation As A Percentage Of PP&E At 15-Year Low

At the end of last year, many analysts were predicting corporate capex would be fairly low this year, around 1.5%, but recently there have been indications that the true number could be closer to 5% because maintenance costs that have been delayed as companies tried to survive the recession could provide another boost to capex growth.

“In order to see if that capex has been enough to cover required maintenance, we looked at depreciation expense as a percentage of PP&E for S&P 1000 (INDEXSP:SP1000) companies,” writes Citi analyst Josh Levin. “The ratio of depreciation to PP&E now stands at a 15-year low.”

Companies may still be in crisis mode

Since...