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More Than One Third of S&P 500 Companies Are Discussing the Election on Q3 Earnings Calls

Earnings

By John Butters  |  November 2, 2020

During each corporate earnings season, it is not unusual for companies to comment on domestic or international events that may have an impact on earnings for future quarters. Given the uncertainty of the upcoming presidential election in the U.S., how many companies in the S&P 500 have commented on the election during their earnings conference calls for the third quarter? How does this number compare to the previous presidential election in 2016? Have S&P 500 companies discussed any specific government policies in conjunction with the election?

Mentions in 2020 vs. 2016

To answer the first question, FactSet searched for the term “election” in the conference call transcripts of the 212 S&P 500 companies that conducted third quarter earnings conference calls from September 15 through October 28 to see if the term was mentioned during the call.

The term “election” was mentioned during the earnings conference calls of 73 S&P 500 companies (or approximately 34% of the 212 S&P 500 companies that had conducted earnings calls between September 15 and October 28).

At the sector level, the Financials (19) and Industrials (15) sectors have the highest number of companies in which the term “election” was discussed during their earnings calls for Q3 2020 during this period.

To answer the second question, FactSet searched for the term “election” in the conference call transcripts of the 284 S&P 500 companies that had conducted third quarter earnings conference calls from September 15, 2016 through October 28, 2016 to see if the term was mentioned during the call.

The term “election” was mentioned during the earnings conference calls of 56 S&P 500 companies (or approximately 20% of the 284 S&P 500 companies that had conducted earnings calls between September 15 and October 28 in 2016).

Thus, through October 28, a higher number (73 vs. 56) and a higher percentage (34% vs. 20%) of S&P 500 companies had discussed the election during their earnings calls in Q3 2020 relative to the same point in time in Q3 2016.

No. of S&P 500 cos citing election on earnings calls 2020 vs. 2016

At the sector level, the Industrials (+9) and Financials (+8) sectors have recorded the largest increases in the number of companies mentioning “election” during their earnings calls for Q3 2020 compared to Q3 2016, while the Communication Services (-4) and Real Estate (-3) sectors have recorded the largest decreases in the number of companies mentioning “election” during their earnings calls for Q3 2020 compared to Q3 2016.

No. of S&P 500 cos citing election on earnings calls 2020 vs. 2016 by sector

Mentions of Specific Policy Areas

To answer the third question, FactSet looked at the context in which the term “election” was mentioned during these 73 earnings conference calls to see if any specific policy areas were referenced in conjunction with the term.

The government policy that was cited by the highest number of S&P 500 companies in conjunction with the election was tax policy, with 18 of the 73 companies (or 25%) discussing this policy area. At the sector level, the sector with the highest number of S&P 500 companies discussing taxes in conjunction with the election was the Financials sector with five companies. A list of the 18 S&P 500 companies that discussed taxes in conjunction with the election and their comments can be found in the full Earnings Insight publication.

Election and policies in S&P 500 Q320 Earnings Calls

After tax policy, stimulus (9) and regulations (7) were the next two policy areas cited by the highest number of S&P 500 companies in conjunction with comments about the election.

It should be noted that nearly all S&P 500 companies continue to discuss COVID-19 on their earnings calls. However, most companies did not directly discuss COVID-19 in the context of the election and government policy (e.g. lockdowns, vaccines, etc.) outside of stimulus. When the pandemic was discussed in conjunction with the election, it was discussed by most companies as another area of uncertainty or risk along with the election, rather than in terms of specific government policies. Therefore, it is not included in the government policy chart above. Here is an example of comments from Etsy discussing COVID-19 and the election as areas of uncertainty.

“We continue to model a wide range of outcomes in our guidance to account for significant uncertainty. This quarter primarily focused on the US election, impacts from the pandemic, continued uncertainty around health of consumer spending and the holiday shopping period which is being influenced by many factors.”

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John Butters

Vice President, Senior Earnings Analyst, Investor Relations

Mr. John Butters is Vice President and Senior Earnings Analyst at FactSet. His 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, The Financial Times, The New York Times, MarketWatch, and Yahoo! Finance. Mr. Butters has over 15 years of experience in the financial services industry. Prior to FactSet in January 2011, he worked for more than 10 years at Thomson Reuters (Thomson Financial), most recently as Director of U.S. Earnings Research (2007-2010).

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