Firms’ Business Conditions And Expectations Concerning Inflation

The Federal Reserve Bank of Atlanta publishes a monthly report titled “Business Inflation Expectations” (BIE) that contains statistics from a survey of regional businesses’ views on various factors that impact profitability.  These factors include unit costs, unit cost expectations, sales levels, pricing, profit margins, and other factors.

As described on the site:

“Approximately 300 panelists receive the survey each month. Panelists represent businesses of various sizes headquartered within the Sixth District, which encompasses Alabama, Florida, Georgia, and sections of Louisiana, Mississippi, and Tennessee. Panelists range from executives of large corporations to owner-operators of small businesses. The industry composition of the panel roughly reflects the makeup of the national economy. Nevertheless, survey responses are weighted by industry shares of national gross domestic product.”

An excerpt from the January 2021 BIE Survey dated January 13, 2021 (involving 209 firms responding):

  • Inflation expectations: Firms’ year-ahead inflation expectations have increased significantly to 2.2 percent from 2.0 percent, on average.
  • Current economic environment: Sales levels and profit margins “compared to normal” decreased over the month; however, they remain near average levels. Year-over-year unit cost growth remains relatively unchanged at 1.8 percent, on average.
  • Quarterly question: Firms’ sales gap (percentage below “normal” unit sales levels) decreased slightly to 6 percent as firms, on average, are now closer to “normal” sales levels.
  • Special question: Firms were asked if the COVID-19 pandemic or its aftermath led to any changes in their pricing strategy.

The responses to the last question will be compiled and released at a later time.

The report also includes other questions and a variety of charts and tables depicting respondents’ answers.

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RevSD, LLC offers the above commentary for informational purposes only, and does not necessarily agree with all (or any) of the views expressed by these outside parties.

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ProfitabilityIssues.com is published by RevSD, LLC.  RevSD, LLC is a management consulting firm and strategic advisory that focuses on the analysis of current and future business conditions, and given these conditions, offers corporations and businesses advice, strategies, and actionable methods on how to optimally increase revenues and profitability.

S&P500 Earnings Trends – December 2020

S&P500 earnings trends and estimates are a notably important topic, for a variety of reasons, at this point in time.

FactSet publishes a report titled “Earnings Insight” that contains a variety of information including the trends and expectations of S&P500 earnings.

For reference purposes, here are two charts as seen in the “Earnings Insight” report of December 18, 2020:

from page 26:

(click on charts to enlarge images)

S&P500 EPS estimates

from page 27:

S&P500 EPS 2010-2021

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RevSD, LLC offers the above commentary for informational purposes only, and does not necessarily agree with all (or any) of the views expressed by these outside parties.

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ProfitabilityIssues.com is published by RevSD, LLC.  RevSD, LLC is a management consulting firm and strategic advisory that focuses on the analysis of current and future business conditions, and given these conditions, offers corporations and businesses advice, strategies, and actionable methods on how to optimally increase revenues and profitability.

Yearly S&P500 EPS Forecasts For 2020, 2021 & 2022

As many are aware, Refinitiv publishes earnings estimates for the S&P500.  

The following estimates are from Exhibit 24 of the “S&P500 Earnings Scorecard” (pdf) of December 16, 2020, and represent an aggregation of individual S&P500 component “bottom up” analyst forecasts.  For reference, the Year 2014 value is $118.78/share; the Year 2015 value is $117.46/share; the Year 2016 value is $118.10/share; the Year 2017 value is $132.00/share; the Year 2018 value is $161.93/share; and the Year 2019 value is $162.93/share:

Year 2020 estimate:

$138.17/share

Year 2021 estimate:

$169.46/share

Year 2022 estimate:

$197.62/share

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RevSD, LLC offers the above commentary for informational purposes only, and does not necessarily agree with all (or any) of the views expressed by these outside parties.

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ProfitabilityIssues.com is published by RevSD, LLC.  RevSD, LLC is a management consulting firm and strategic advisory that focuses on the analysis of current and future business conditions, and given these conditions, offers corporations and businesses advice, strategies, and actionable methods on how to optimally increase revenues and profitability.

S&P500 EPS Forecasts From Standard & Poor’s December 17, 2020

As many are aware, Standard & Poor’s publishes earnings estimates for the S&P500.  

For reference purposes, the most current estimates are reflected below, and are as of December 17, 2020:

Year 2020 estimates add to the following:

-From a “bottom up” perspective, operating earnings of $120.81/share

-From a “top down” perspective, operating earnings of N/A

-From a “bottom up” perspective, “as reported” earnings of $93.36/share

Year 2021 estimates add to the following:

-From a “bottom up” perspective, operating earnings of $166.63/share

-From a “top down” perspective, operating earnings of N/A

-From a “bottom up” perspective, “as reported” earnings of $144.00/share

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RevSD, LLC offers the above commentary for informational purposes only, and does not necessarily agree with all (or any) of the views expressed by these outside parties.

—–

ProfitabilityIssues.com is published by RevSD, LLC.  RevSD, LLC is a management consulting firm and strategic advisory that focuses on the analysis of current and future business conditions, and given these conditions, offers corporations and businesses advice, strategies, and actionable methods on how to optimally increase revenues and profitability

Firms’ Expectations Concerning Inflation And Pricing Changes

The Federal Reserve Bank of Atlanta publishes a monthly report titled “Business Inflation Expectations” (BIE) that contains statistics from a survey of regional businesses’ views on various factors that impact profitability.  These factors include unit costs, unit cost expectations, sales levels, pricing, profit margins, and other factors.

As described on the site:

“Approximately 300 panelists receive the survey each month. Panelists represent businesses of various sizes headquartered within the Sixth District, which encompasses Alabama, Florida, Georgia, and sections of Louisiana, Mississippi, and Tennessee. Panelists range from executives of large corporations to owner-operators of small businesses. The industry composition of the panel roughly reflects the makeup of the national economy. Nevertheless, survey responses are weighted by industry shares of national gross domestic product.”

An excerpt from the December 2020 BIE Survey dated December 16, 2020 (involving 204 firms responding):

  • Inflation expectations: Firms’ year-ahead inflation expectations have remained relatively unchanged at 2.0 percent, on average.
  • Current economic environment: Sales levels and profit margins “compared to normal” improved over the month and are near average levels. Year-over-year unit cost growth increased significantly to 1.7 percent, on average.
  • Quarterly question: Firms’ long-term (per year, over the next five to 10 years) inflation expectations increased significantly to 2.7 percent, on average.
  • Special question: Firms assessed how the price of their major product/product line or service changed over the last year. They then indicated how they expect the price to change over the next year and what their biggest concerns are for 2021. A breakdown of the results can be found in the special question section below.

The report also includes other questions and a variety of charts and tables depicting respondents’ answers.

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RevSD, LLC offers the above commentary for informational purposes only, and does not necessarily agree with all (or any) of the views expressed by these outside parties.

—–

ProfitabilityIssues.com is published by RevSD, LLC.  RevSD, LLC is a management consulting firm and strategic advisory that focuses on the analysis of current and future business conditions, and given these conditions, offers corporations and businesses advice, strategies, and actionable methods on how to optimally increase revenues and profitability.