Fewer S&P 500 Companies Discussing “Inflation” on Earnings Calls for 7th Straight Quarter

With the year-over-year CPI number falling back to the 3.1% to 3.5% level in recent months, did fewer S&P 500 companies comment on inflation during their earnings conference calls for the first quarter relative to recent quarters?

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 March 15 through May 17.

Of these companies, 219 cited the term “inflation” during their earnings calls for the first quarter. This is the lowest number of S&P 500 companies citing “inflation” on earnings calls going back to Q2 2021 (218). It also marks the seventh consecutive quarter in which the number of S&P 500 companies citing the term “inflation” has declined quarter-over-quarter.

However, it should be noted that the number of S&P 500 companies citing “inflation” on earnings calls for Q1 2024 is still well above the 10-year average of 180. It should also be noted that there are still about 30 S&P 500 companies that have not reported earnings for the first quarter. Thus, the final number of companies citing “inflation” will likely be higher than the current 219. However, the final number will not finish above the previous quarter’s number of 285.

For these 219 companies, the average number of times “inflation” was mentioned on their earnings calls was 4, while the median number of times “inflation” was mentioned on their earnings calls was 2. The term “inflation” was mentioned at least 10 times on the earnings calls of 24 S&P 500 companies, led by Darden Restaurants (23) and General Mills (21).

At the sector level, the Financials (49) and Industrials (43) sectors have the highest number of companies that cited “inflation” on earnings calls for Q1. However, the Consumer Staples (86%) and Financials (72%) sectors have the highest percentages of companies that cited “inflation” on their Q1 earnings calls during this period.

What are these companies saying about inflation on their earnings calls? Transcript Assistant (FactSet’s interactive generative AI solution that extracts the most salient points from earnings call transcripts with questions from users and pre-populated prompts) can be used to answer this question.

For example, Transcript Assistant generated the following summary of all the statements about “inflation” from the earnings call transcript of McDonald’s on April 30:

The document mentions inflation in several contexts. Firstly, it discusses how consumers are becoming more discriminating with their spending due to elevated prices in their day-to-day spending, which is putting pressure on the Quick Service Restaurant (QSR) industry. This is attributed to significant inflation creating challenging consumer dynamics. Secondly, it mentions that McDonald's has navigated through the elevated cost environment of the past couple of years, with average franchisee cash flow and corresponding margins remaining strong. Thirdly, it discusses the impact of inflation on labor costs, with high single-digit labor inflation expected in the US, largely due to changes in California. Lastly, it mentions that food and paper inflation has returned to more historical levels.*

*Results may vary based on prompts used.

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