Management seems pretty confident a recession is coming and profits will take a hit.

Executives detailing second quarter earnings have said more about the recession than they have since the last real recession that hit the US. Concerns over an economic slowdown have also weighed on projections of future earnings this season.

The word ‘recession’ appeared in the quarterly earnings call for the 240 S&P 500 SPX.
FactSet analysis released on Friday showed companies on earnings calls held from June 15 to Thursday. It was the highest since at least 2010 and was set in the first quarter of 2020, when fears of COVID-19 hit the economy212, according to FactSet senior earnings analyst John Butters. has broken its all-time high.

Among the latest executives to announce a recession, RH RH,
CEO Gary Friedman said the phrase nearly a dozen times during the luxury furniture retailer’s earnings call on Thursday following its second-quarter results.

“People keep saying, are we going to be in a recession? We’re in a recession. Anyone who thinks we’re not in a recession is crazy,” he said. “The housing market is in recession and it’s just getting started, so he’s probably going to have a tough 12-18 months in this industry.”

Other understatements were more common in pandemic-era earnings calls, according to FactSet analysis. 412 of the S&P 500 companies cited ‘inflation’ in their second quarter earnings calls, and 325 mentioned ‘supply chain’. However, these factors did not appear to have a significant impact on Q2 results, as most S&P 500 companies reported better-than-expected Q2 results. Butters reported that 75% of his S&P 500 companies have beaten earnings expectations and 70% have beaten sales forecasts.

However, some analysts expect these second-quarter concerns to spill over into third-quarter results. Butters said his earnings per share estimate for the third quarter is down 5.5% from June 30. This was his biggest one-quarter decline since the second quarter of 2020 and well above his five-year average of 2.3%.

This change can result from disappointing orientation. According to FactSet, 63 companies in the S&P 500 issued negative earnings forecasts for the third quarter, while 40 issued positive forecasts.

“Analysts were more pessimistic on revised earnings forecasts for the S&P 500 companies in the third quarter compared to recent quarters, but companies were more pessimistic about their third-quarter earnings outlook compared to recent quarters. was slightly less pessimistic than in recent quarters in the report.

“However, analysts and companies are more pessimistic about third-quarter earnings expectations compared to recent averages.”

profit of the week

A call to put on your agenda: Oracle Corporation

Oracle ORCL,
The company laid off hundreds of employees last month, The Wall Street Journal reported, mostly in the advertising and customer experience departments of software developers. However, the software company has yet to disclose details of these layoffs, including notifying the California Department of Employment Development, as required by law. Expect questions about cost and headcount cuts on Oracle’s conference call after its first-quarter earnings call on Monday. In June, the company completed its $28.3 billion acquisition of Cerner, whose software is used by hospitals and other healthcare players to review patient data, leaving the market on the verge of further cuts. It may be clearer as to whether

Numbers to watch: Forecasts by Adobe Inc.

Adobe ADBE,
UBS analysts wrote last week that several Adobe partners and customers described an environment characterized by tighter budgets and “macro/spending pressures on creative and experience segments. Digital.” Analysts say that for makers of software platforms such as Photoshop and Illustrator, “a difficult spending environment could dampen Q4/November outlook.”

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