How do companies navigate inflationary waters?


While first quarter earnings results weren’t great, they’re still not as bad as some in the market had begun to fear before this earnings cycle began.

Inflation remains a strong headwind across the board, weighing on margins and profitability. But most companies are able to pass the extra cost on to end consumers, who stay in great shape. In fact, there’s no evidence in the first quarter results we’ve seen before of the feared moderation in economic growth or consumer spending.

Despite Netflix’s big NFLX disappointment, the tone and substance of the management advice and commentary also remains reasonable and reassuring. We’re not referring here to Tesla’s TSLA whose hit numbers may not offer universal readings for the broader economy, but Proctor & Gamble PG’s impressive results and guidance lend themselves to that kind of reassuring reading.

As for the first quarter dashboard, we now have first quarter results for 89 members of the S&P 500, through the morning of April 21.st. Total revenue for these 89 index members is down -2% from the same period last year on revenue up +9.2%, with 78.7% beating EPS estimates and 69.7% income estimates.

The proportion of positive EPS and revenue beats is the lowest since the second quarter of 2020, which was the most affected period of Covid 19.

For more details on the Q1 earnings season and overall earnings picture, please see our weekly earnings trend report here >>> Positive Surprises at Covid Lows

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Netflix, Inc. (NFLX): Free Stock Analysis Report

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