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Highest Number of S&P 500 Companies Citing “Inflation” on Q2 Earnings Calls in Over 10 Years

Earnings

By John Butters  |  September 17, 2021

The market continues to be concerned about higher inflation. Consumer prices increased 5.3% in August, which was the second-largest year-over-year increase since August 2008, trailing only the 5.4% (year-over-year) increases in the previous two months. Producer prices rose 8.3% in August, which was the largest year-over-year increase since the U.S. Bureau of Labor Statistics began tracking this measure in 2010.

In light of these high inflation numbers, did more S&P 500 companies than normal comment on inflation during their earnings conference calls for Q2? 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 S&P 500 companies that conducted earnings conference calls from June 15 through September 14.

Of these companies, 224 cited the term “inflation” during their earnings calls for the second quarter. 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 197, which occurred in Q1 2021. In addition, the second quarter marked the largest year-over-year increase (+160) in the number of S&P 500 companies citing “inflation” on quarterly earnings calls going back to at least 2010. At the sector level, the Industrials sector had the highest number of companies that cited “inflation” on earnings calls for Q2 2021 at 50, followed by the Consumer Discretionary (33), Financials (29), and Consumer Staples (27) sectors. However, the Consumer Staples (87%), Materials (75%), and Industrials (68%) sectors had the highest percentages of companies that cited “inflation” on their Q2 earnings calls from June 15 through September 14.

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Given the high number of S&P 500 companies that discussed “inflation” on earnings calls for Q2, is inflation having a negative impact on expected earnings and profit margins for the full year? The answer appears to be no. Both the estimated earnings growth rate for CY 2021 (42.6%) and the estimated net profit margin (12.4%) for CY 2021 are higher today compared to the estimates back on June 30. At the sector level, ten of the 11 sectors are projected to report higher earnings and nine of the 11 sectors are predicted to report higher net profit margins for CY 2021 today relative to June 30.

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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.

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John Butters

Vice President, Senior Earnings Analyst, Investor Relations

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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