During each corporate earnings season, it is not unusual for companies to comment on subjects that had an impact on their earnings in a given quarter or may have an impact on earnings in future quarters. Given the concerns in the market about supply chain disruptions, did more S&P 500 companies than normal comment on supply chains during their earnings conference calls for the fourth quarter?
Searching for Mentions Across Conference Call Transcripts
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 the S&P 500 companies that conducted earnings conference calls from December 15 through March 14.
Of these companies, 358 cited the term “supply chain” during their earnings calls for the fourth quarter, which is well above the five-year average of 187. In fact, this is the second-highest 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 current record is 362, which occurred in the previous quarter (Q3 2021). In addition, the fourth quarter tied the mark with Q3 2021 for the highest percentage of S&P 500 companies citing “supply chain” on quarterly earnings calls going back to at least 2010 at 74% (358 out of 482).
At the sector level, the Industrials (65) and Information Technology (57) sectors had the highest number of companies that cited “supply chain” on earnings calls for Q4. On the other hand, the Consumer Staples (100%) and Materials (96%) sectors had the highest percentages of companies that cited “supply chain” on their Q4 earnings calls during this period.
Impact on Profit Margin Expectations
Given the high number of S&P 500 companies that cited “supply chain” on Q4 earnings calls, have net profit margin expectations for Q1 been revised? The estimated net profit margin for the S&P 500 for Q1 is 12.1%, which is below the estimate of 12.4% recorded on December 31. Eight sectors have seen a decrease in their Q1 net profit margin estimates since December 31, led by the Industrials (to 7.9% from 8.8%) and Communication Services (to 12.1% from 12.9%) sectors.
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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).
The information contained in this article is not investment advice. FactSet does not endorse or recommend any investments and assumes no liability for any consequence relating directly or indirectly to any action or inaction taken based on the information contained in this article.