Given the continuing concern in the market about inflation, have more S&P 500 companies than normal commented on inflation during their earnings conference calls for the fourth quarter?
The answer is yes. 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 December 15 through February 23.
Of these companies, 325 have cited the term “inflation” during their earnings calls for the fourth quarter. This number is above the 5-year average of 201 and above the 10-year average of 157.
However, it should be noted that this is the lowest number of S&P 500 companies citing “inflation” on earnings calls going back to Q3 2021 at 307 (using current constituents and going back in time). It also marks the largest quarter-over-quarter percentage decline (-20%) in the number of S&P 500 companies citing the term “inflation” on their earnings calls since Q1 2020 (-58%). However, there are still about 30 S&P 500 companies that have not reported actual earnings for the fourth quarter. So while the final number will likely finish higher than 325, it will fall short of the 404 from the previous quarter.
At the sector level, the Information Technology (-17) and Health Care (-14) sectors have seen the largest quarter-over-quarter declines in the number of companies that cited “inflation” on earnings calls for Q4 relative to Q3.
Despite the decrease in the number of S&P 500 companies citing “inflation” on Q4 earnings calls, estimates for net profit margins for Q1 2023 (to 11.4% from 11.9%) and CY 2023 (to 11.9% from 12.2%) have declined since December 31.
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