The market continues to be concerned about higher inflation. Consumer prices increased by 7.9% in February, which was the 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 fourth quarter?
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 December 15 through March 11.
Of these companies, 356 cited the term “inflation” during their earnings calls for the fourth quarter, which is well above the five-year average of 144. 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 304, which occurred in the previous quarter (Q3 2021). In addition, the fourth quarter marked the highest percentage of S&P 500 companies citing “inflation” on quarterly earnings calls going back to at least 2010 at 74% (356 out of 482).
At the sector level, the Industrials (61) and Financials (52) sectors have the highest number of companies that cited “inflation” on earnings calls for Q4. On the other hand, the Consumer Staples (100%) and Materials (89%) sectors have the highest percentages of companies that cited “inflation” on their Q4 earnings calls during this period.
Given the high number of S&P 500 companies that have cited “inflation” on Q4 earnings calls, have net profit margin expectations for Q1 been revised? The estimated net profit margin for the S&P 500 for Q1 is 12.2%, which is below the estimate of 12.4% recorded on December 31. Eight sectors have seen a decrease in their Q1 net profit margin estimates since December 31, led by the Industrials (to 7.9% from 8.8%) sector.
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.