Deciphering the Decline in S&P 500 Companies Citing “Inflation” in 2Q23 Conference Calls

Through Document Search, FactSet searched for the term “inflation” in the conference call transcripts of all the S&P 500 companies that conducted earnings conference calls from June 15 through September 7. 

The Numerical Dip in S&P 500

Of these companies, 296 cited the term “inflation” during their earnings calls for the second quarter. This is the lowest number of S&P 500 companies citing “inflation” on earnings calls going back to Q2 2021 (221). It also marks the fourth consecutive quarter in which the number of S&P 500 companies citing the term “inflation” has declined quarter-over-quarter.

However, it should be noted that the number of S&P 500 companies citing “inflation” on earnings calls for Q2 2023 is still well above the 5-year average of 217 and the 10-year average of 168. 

Sectoral Insights in S&P 500

At the sector level, the Financials (49) and Industrials (46) sectors have the highest number of companies that cited “inflation” on earnings calls for Q2. However, the Consumer Staples (86%), Consumer Discretionary (76%), and Materials (76%) sectors have the highest percentages of companies that cited “inflation” on their Q2 earnings calls during this period. 

Impact on Stock Performance in S&P 500 Companies

It is interesting to note that S&P 500 companies that cited “inflation” on Q2 earnings calls have seen a weaker average stock price performance in recent months compared to S&P 500 companies that did not cite “inflation” on Q2 earnings calls.

For S&P 500 companies that cited “inflation” on Q2 earnings calls, the average change in price since June 30 is -2.8% and the average change in price since December 31 is 2.9%. For S&P 500 companies that did not cite “inflation” on Q2 earnings calls, the average change in price since June 30 is -0.3% and the average change in price since December 31 is 10.4%. 

(Survey by FactSet) 

Conclusion

In conclusion, while the decline in the number of S&P 500 companies referencing “inflation” in their earnings calls is noteworthy, it’s crucial to view these statistics within the broader context.

The relative high numbers compared to historical averages indicate that the topic remains relevant. Additionally, the varying stock performance for companies mentioning “inflation” presents a compelling puzzle for investors and analysts alike.

As the financial landscape continues to evolve, it is imperative to closely monitor these trends to make informed investment decisions.

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