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Highest Number of S&P 500 Cos. Citing “Supply Chain” on Q3 Earnings Calls in Over 10 Years

Written by John Butters | Nov 19, 2021

During each corporate earnings season, it is not unusual for companies to comment on subjects that had an impact on their earnings and revenues in a given quarter, or may have an impact on earnings and revenues in future quarters. Given the concerns in the financial markets about supply chain disruptions, have more S&P 500 companies than normal commented on their supply chains during their earnings conference calls for the third 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 “supply chain” in the conference call transcripts of all S&P 500 companies that conducted earnings conference calls from September 15 through November 19.

Of these companies, 342 have cited the term “supply chain” during their earnings calls for the third quarter, which is well above the five-year average of 178. In fact, this is the highest overall number of S&P 500 companies citing “supply chain” on earnings calls going back to at least 2010 (using current index constituents going back in time). The previous record was 292, which occurred in Q1 2020. At the sector level, the Industrials sector has the highest number of companies that have cited “supply chain” on earnings calls for Q3 at 67, followed by the Information Technology (46) and Consumer Discretionary (45) sectors. However, the Materials (96%), Consumer Staples (96%), and Industrials (94%) sectors have the highest percentages of companies that have cited “supply chain” on their Q3 earnings calls from September 15 through November 19.

Given the high number of S&P 500 companies that have cited “supply chain” on Q3 earnings calls, have net profit margin expectations for Q4 been revised? The estimated net profit margin for the S&P 500 for Q4 is 11.8%, which is below the (near record-high) net profit margin of 12.9% reported in Q3 2021. It is also slightly below the estimate of 11.9% recorded on September 30. Six sectors have seen an increase in their Q4 net profit margin estimates since September 30, led by the Energy (to 9.8% from 7.2%) sector. On the other hand, five sectors have seen a decrease in their Q4 net profit margin estimates since September 30, led by the Consumer Discretionary (to 5.2% from 6.2%) and Industrials (to 8.5% from 9.3%) sectors.

Author’s Note: The FactSet Earnings Insight report will not be published next Friday (November 26). The next edition of the report will be published on (Thursday) December 2.

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