While the majority of S&P 500 companies will report earnings results for Q1 2018 over the next few weeks, about 5% of the companies in the index (26 companies) have reported earnings results for the first quarter through April 12. Given the number of concerns in the market, have these companies discussed specific factors that had a negative impact on earnings or revenues in the first quarter (or are expected to have a negative impact in future quarters) during their earnings conference calls?
To answer this question, FactSet searched for specific terms related to a number of factors (i.e. “currency,” “China,” etc.) in the conference call transcripts of the 25 S&P 500 companies that have conducted first quarter earnings conference calls through April 12 to see how many companies discussed these factors. FactSet then looked to see if the company cited a negative impact, expressed a negative sentiment (i.e. “volatility,” “uncertainty,” “pressure,” “headwind,” etc.), or discussed clear underperformance in relation to the factor for either the quarter just reported or in guidance for future quarters. The results are shown below.
Analyzing the Factors
Of the factors analyzed, the largest number of companies expressed a negative sentiment or discussed a negative impact regarding foreign exchange rates. Of the 25 companies that have conducted earnings calls to date, seven (or 28%) have discussed a negative impact or expressed a negative sentiment about foreign exchange rates.
However, it is important to note that more than twice as many companies in the index have expressed a positive sentiment or discussed a positive impact from foreign exchange rates than have expressed a negative sentiment or discussed a negative impact from foreign exchange rates. Of the 25 companies that have conducted earnings calls to date, 15 (or 60%) have discussed a positive impact or expressed a positive sentiment about this factor.
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.