While the majority of S&P 500 companies will report earnings results for Q1 2022 over the next few weeks, 4% of the companies in the index (20 companies) have already reported earnings results for the first quarter (through April 7). Given current expectations for single-digit earnings growth for the first quarter, have these companies discussed specific factors that had a negative impact on earnings or revenues for the first quarter (or are expected to have a negative impact in future quarters) during their earnings conference calls?
Searching for Mentions Across Conference Call Transcripts
To answer this question, FactSet searched for specific terms related to a number of factors (e.g. “currency,” “labor,” etc.) in the conference call transcripts of the 20 S&P 500 companies that conducted first quarter earnings conference calls through April 7 to see how many companies discussed these factors. FactSet then looked to see if the company cited a negative impact, expressed a negative sentiment (e.g. “volatility,” “uncertainty,” “pressure,” “headwind,” etc.), or discussed clear underperformance in relation to the factor for either the quarter just reported or in guidance for future quarters. The results for Q1 and a comparison to the same time period in Q4 are shown below.
Labor costs and shortages have been cited by the highest number companies in the index to date as a factor that either had a negative impact on earnings or revenues in Q1, or is expected to have a negative impact on earnings or revenues in future quarters. Of these 20 companies, 13 (or 65%) have discussed a negative impact from this factor. After labor shortages and costs, COVID costs and impacts (12) and supply chain costs and disruptions (12) have been discussed by the highest number of S&P 500 companies.
Companies Are Still Reporting Earnings Growth
It is interesting to note that despite the negative impacts cited by these 20 companies, they have reported aggregate (year-over-year) earnings growth of 18.5% and average (year-over-year) earnings growth of 22.7%. It appears most of these companies are raising prices to offset these negative impacts, as 18 of these 20 companies (90%) discussed increasing prices or improving price realization on their earnings calls.
While 13 S&P 500 companies cited “Ukraine” on their earnings calls, only five discussed a specific negative impact to their business due to the military conflict.
For a list of the S&P 500 companies that cited labor costs and other factors on their earnings calls, please click the link below to access the full FactSet Earnings Insight report and refer to pages 33-40.
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Mr. John Butters is Vice President and Senior Earnings Analyst at FactSet. His weekly research report, “Earnings Insight,” provides analysis and commentary on trends in corporate earnings data for the S&P 500 including revisions to estimates, year-over-year growth, performance relative to expectations, and valuations. He is a widely used source for the media and has appeared on CNBC, Fox Business News, and the Business News Network. In addition, he has been cited by numerous print and online publications such as The Wall Street Journal, The Financial Times, The New York Times, MarketWatch, and Yahoo! Finance. Mr. Butters has over 15 years of experience in the financial services industry. Prior to FactSet in January 2011, he worked for more than 10 years at Thomson Reuters (Thomson Financial), most recently as Director of U.S. Earnings Research (2007-2010).
The information contained in this article is not investment advice. FactSet does not endorse or recommend any investments and assumes no liability for any consequence relating directly or indirectly to any action or inaction taken based on the information contained in this article.