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85% of S&P 500 Companies Are Citing “Inflation” on Q1 Earnings Calls

Earnings

By John Butters  |  May 13, 2022

The market continues to be concerned about higher inflation. Consumer prices increased by 8.3% in April, which was the second largest (year-over-year) increase since 1982. In light of recent high inflation numbers, have more S&P 500 companies than normal commented on inflation during their earnings conference calls for the first quarter?

Searching for Mentions Across Conference Call Transcripts

FactSet Document Search (which allows users to search for key words or phrases across multiple document types) was used to answer this question. Through Document Search, FactSet searched for the term “inflation” in the conference call transcripts of all the S&P 500 companies that conducted earnings conference calls from March 15 through May 12.

Of these 445 companies, 377 have cited the term “inflation” during their earnings calls for the first quarter, which is well above the five-year average of 155. In fact, this is the highest overall number of S&P 500 companies citing “inflation” on earnings calls going back to at least 2010 (using current index constituents going back in time). The previous record was 356, which occurred in Q4 2021. However, there are still about 40 S&P 500 companies that have not reported actual earnings for the first quarter to date, so the final number will likely finish even higher.

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It should also be noted that 85% of the S&P 500 companies (377 out of 445) that have conducted earnings calls for the first quarter (through May 12) have cited “inflation” during the call. This is also the highest percentage of S&P 500 companies citing “inflation” on earnings calls also going back to at least 2010. The previous record was 74%, which also occurred in Q4 2021.

At the sector level, the Industrials (62) and Financials (55) sectors have the highest number of companies citing “inflation” on earnings calls for Q1. On the other hand, the Materials (100%) and Consumer Staples (96%) sectors have the highest percentages of companies citing “inflation” on their Q1 earnings calls during this period.

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Impact on Profit Margin Expectations

Given the high number of S&P 500 companies that have cited “inflation” on Q1 earnings calls, have net profit margin expectations for the S&P 500 for Q2 2022 and CY 2022 been revised? The current net profit margin estimate of 12.5% for Q2 2022 is below the estimate of 12.7% on March 31, while the current net profit margin estimate of 12.6% for CY 2022 is also below estimate of 12.7% on March 31.

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Listen to Earnings Insight on the go! In our weekly Earnings Insight podcast, John Butters provides an update on S&P 500 corporate earnings and related topics based on his popular Earnings Insight publication. The podcast is made available every Monday—listen on Apple podcasts, Spotify, or factset.com.

This blog post is for informational purposes only. The information contained in this blog post is not legal, tax, or 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.

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John Butters

Vice President, Senior Earnings Analyst

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).

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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.