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Pentair PLC (NYSE:PNR)
Retained Earnings
$2,109 Mil (As of Jun. 2014)

Retained earnings is the accumulated portion of net income that is not distributed to shareholders. Pentair PLC's retained earnings for the quarter that ended in Jun. 2014 was $2,109 Mil.

Pentair PLC's quarterly retained earnings increased from Dec. 2013 ($1,829 Mil) to Mar. 2014 ($1,948 Mil) and increased from Mar. 2014 ($1,948 Mil) to Jun. 2014 ($2,109 Mil).

Pentair PLC's annual retained earnings declined from Dec. 2011 ($1,466 Mil) to Dec. 2012 ($1,292 Mil) but then increased from Dec. 2012 ($1,292 Mil) to Dec. 2013 ($1,829 Mil).


Definition

Retained Earnings is the accumulated portion of net income that is not distributed to shareholders. Because the net income was not distributed to shareholders, shareholders’ equity is increased by the same amount.

Of course, if a company loses, it is called retained losses, or accumulated losses.


Explanation

Historically profitable companies sometimes have negative retained earnings. This is because they have cumulatively paid out more to shareholders than they reported in profits.

For example, in 2011, Microsoft had negative retained earnings. This does not mean the company lost more money than it made over the years. It just means it paid out more money than it earned.

If a company has negative retained earnings, investors should check the 10-year financial results. They should not assume that negative retained earnings prove a company has generally lost money in the past.

Of course, many companies with negative retained earnings have indeed lost money in the past.

Retained Earnings: Warren Buffett’s Secret.

One of the most important indicators of durable competitive advantage. Net earnings can be paid out as dividends, used to buy back shares or retained for growth.

If the company loses more than it has accumulated, retained earnings is negative.

If a company isn’t adding to its retained earnings, it isn’t growing its net worth.

Rate of growth of retained earnings is good indicator whether it’s benefiting from a competitive advantage.

Microsoft is negative because it chose to buyback stock and pay dividends.

The more earnings retained, the faster it grows and increases growth rate for future earnings.


Historical Data

* All numbers are in millions except for per share data and ratio. All numbers are in their own currency.

Pentair PLC Annual Data

Dec04Dec05Dec06Dec07Dec08Dec09Dec10Dec11Dec12Dec13
Retained Earnings 8891,0211,1481,2961,4581,5021,6251,4661,2921,829

Pentair PLC Quarterly Data

Mar12Jun12Sep12Dec12Mar13Jun13Sep13Dec13Mar14Jun14
Retained Earnings 1,6181,6681,6761,2921,3441,4981,6711,8291,9482,109
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