The Number of Zombie Companies Is Falling Despite Bites From Inflation and Covid
- Number of Russell 3000 zombies fell 13% since start of year
- Pandemic stimulus made the difference, says Russell’s Brown
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In a year when many companies faced severe headwinds from higher inflation, supply chain woes and fresh Covid waves, the ranks of so-called zombie companies -- those that aren’t earning enough to cover their interest payments -- actually declined.
In the Russell 3000 Index, a broad benchmark of U.S. stocks, there were 656 companies that didn’t generate sufficient profit in the past four quarters to cover their interest expenses as of December 27. That’s down from 756 companies at the start of the year -- a drop of 13%.