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More Than 40% Increase in S&P 500 Companies Citing 'Tariffs' on Earnings Calls in Q2 vs. Q1

Companies and Earnings

By John Butters  |  August 12, 2019

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. To date, 90% of the companies in the index had reported earnings results for the second quarter. Given the continued implementation of tariffs by the Trump administration, have companies in the S&P 500 commented on “tariffs” during their earnings conference calls for the second quarter?

To answer this question, FactSet searched for the term “tariff” in the conference call transcripts of the 438 S&P 500 companies that had conducted earnings conference calls between June 15 and August 8.

Number of Companies Citing Tarrif

Of these 438 companies, 124 (or 28%) cited the term “tariff” during the call. At the sector level, the Industrials led all sectors with 35 companies citing” the term “tariff” on earnings calls.

Number of Companies Citing Tarrif by Sector

The number of S&P 500 companies discussing tariffs on Q2 2019 earnings calls during this time is well above the number through the same point in time in the first quarter. From March 15 through May 8, 88 S&P 500 companies (or 21%) had cited the term “tariff” during their Q1 2019 earnings calls. Thus, there has been a 41% increase (124 vs. 88) in the number of S&P 500 companies citing “tariffs” in Q2 relative to Q1. At the sector level, 10 of the 11 sectors witnessed an increase in the number of S&P 500 companies citing the term “tariff” on earnings calls in Q2 2019 relative to Q1 2019, led by the Information Technology sector (+11).

However, the number of S&P 500 companies discussing tariffs on Q2 2019 earnings calls is still well below the number at the same point in time in the year-ago quarter. From June 15 (2018) through August 8 (2018), 162 S&P 500 companies (or 38%) had cited the term “tariff” on their Q2 2018 earnings calls. Thus, the number of S&P 500 companies citing “tariffs” in Q2 2019 is still 23% below the number from last year at the same point in time.

It is interesting to note that the number of S&P 500 companies citing “tariffs” had declined for three straight quarters until Q2 2019. But, based on the numbers for Q2 2019, it appears concerns about tariffs may be back on the rise for S&P 500 companies.

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John Butters

Senior Earnings Analyst

John’s 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, Financial Times, The New York Times, MarketWatch, and Yahoo! Finance.

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