During each corporate earnings season, companies often comment on economic conditions that may impact their business. Given the decline in GDP for a second straight quarter, did more S&P 500 companies than normal discuss the term “recession” during their earnings conference calls for the second 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 “recession” in the conference call transcripts of all the S&P 500 companies that conducted earnings conference calls from June 15 through September 8.
Of these companies, 240 cited the term “recession” during their earnings calls for the second quarter, which is well above the 5-year average of 52. In fact, this is the highest number of S&P 500 companies citing “recession” on earnings calls going back to at least 2010 (using current index constituents going back in time). The previous record (since 2010) was 212, which occurred in Q1 2020 at the start of the COVID-19 pandemic.
By way of comparison, 412 S&P 500 companies have cited “inflation” on Q2 earnings calls and 325 S&P 500 companies have cited “supply chain” on Q2 earnings calls.
At the sector level, the Financials (53) and Industrials (37) sectors have the highest number of companies that cited “recession” on earnings calls for Q2. On the other hand, the Financials (85%) and Real Estate (73%) sectors have the highest percentages of companies that cited “recession” on their Q2 earnings calls during this period.
Given the high number of S&P 500 companies that have cited “recession” on Q2 earnings calls, have analysts lowered earnings estimates for S&P 500 companies more than normal for Q3? The answer is also yes. For more details, please see: https://insight.factset.com/analysts-making-larger-cuts-than-average-to-eps-estimates-for-sp-500-companies-for-q3
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