Forecasted Inflation And Effects Of Supply Chain Disruption

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 August 2021 BIE Survey dated August 11, 2021 (involving 186 firms responding):

  • Inflation expectations: Firms’ year-ahead inflation expectations increased significantly to 3.0 percent, on average.
  • Current economic environment: Sales levels “compared to normal” remain unchanged. However, profit margins decreased slightly. Year-over-year unit cost growth increased significantly to 3.3 percent, on average.
  • Quarterly question: Approximately one-third of firms expect both labor costs and nonlabor costs to put significant upward influence on prices. About 24 percent of firms expect sales levels to put moderate upward influence on prices over the next 12 months, down from 38 percent previously.
  • Special question: Firms were asked to describe how COVID-19 has disrupted their supply chains and business operations. They then indicated the severity and expected length of both types of disruption. Additionally, firms provided their level of concern over the COVID-19 Delta variant and when they expect business operations to return to “normal.” A breakdown of the results can be found in the special question section below.

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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 – July 2021

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 July 16, 2021:

from page 24:

(click on charts to enlarge images)

S&P500 earnings forecasts

from page 25:

S&P500 EPS

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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 For Years 2021, 2022, And 2023

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 July 19, 2021, 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; the Year 2019 value is $162.93/share; and the Year 2020 value is $139.72/share;

Year 2021 estimate:

$192.82/share

Year 2022 estimate:

$214.37/share

Year 2023 estimate:

$233.07/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 July 15, 2021

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 July 15, 2021:

Year 2021 estimates add to the following:

-From a “bottom up” perspective, operating earnings of $189.83/share

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

-From a “bottom up” perspective, “as reported” earnings of $179.81/share

Year 2022 estimates add to the following:

-From a “bottom up” perspective, operating earnings of $211.18/share

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

-From a “bottom up” perspective, “as reported” earnings of $198.50/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

Forecasted Inflation And Expectations Concerning Price 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 July 2021 BIE Survey dated July 14, 2021 (involving 175 firms responding):

  • Inflation expectations: Firms’ year-ahead inflation expectations decreased significantly to 2.8 percent, on average.
  • Current economic environment: Sales levels “compared to normal” increased slightly. However, profit margins remain unchanged. Year-over-year unit cost growth is relatively unchanged at 2.9 percent, on average.
  • Quarterly question: Firms’ sales gap (percentage below “normal” unit sales levels) increased to 0.5 percent above normal as firms, on average, are now recording historically high sales levels.
  • Special question: We asked firms how much they change the price of their primary good or service during “normal” times. They were then asked to report whether they experienced a price change during the last 12 months and what the percent change was. We followed up by asking about their expected price changes during the next 12 months. 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.

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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.