Highest Number of S&P 500 Companies Citing “Inflation” on Q1 Earnings Calls in Over 10 Years

The market continues to be concerned about higher inflation. Consumer prices increased by 8.6% in May, which was the largest year-over-year increase since 1981. In light of recent high inflation numbers, did more S&P 500 companies than normal comment 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 June 10.

Of these companies, 417 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 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 357, which occurred in the previous quarter (Q4 2021). In addition, the first quarter marked the highest percentage of S&P 500 companies citing “inflation” on quarterly earnings calls going back to at least 2010 at 86% (417 out of 487).

Mentions by Sector

At the sector level, the Industrials (65), Consumer Discretionary (57), and Financials (55) sectors have the highest number of companies that cited “inflation” on earnings calls for Q1. On the other hand, the Materials (100%), Consumer Staples (97%), and Consumer Discretionary (97%) sectors have the highest percentages of companies that cited “inflation” on their Q1 earnings calls during this period.

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 12.4% 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 equal to the estimate of 12.6% on March 31.

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