Investors optimistic this earnings season, though inflation concerns linger
Almost 90 percent of investors believe earnings in Q2 2021 will beat the prior quarter, according to a recent quarterly report by strategic consultancy Corbin Advisors.
More than half (60 percent) of investors say they believe Q2 2021 earnings will be ‘better than consensus’, which is a similar figure to last quarter’s response. The majority of investors (77 percent) also expect improved EPS growth this quarter.
A large proportion of global investors (71 percent) say they expect companies to raise annual guidance during this quarter – a clear sign of optimism – while 23 percent believe companies will maintain annual guidance.
Inflation is a cause for concern among investors
Looking specifically at the tone, the report notes that 86 percent of investors say executives’ tone is upbeat. But investors themselves (68 percent) say they are neutral to bullish or bullish. This is a slight drop from the record high (75 percent) recorded last quarter.
The majority of investors (69 percent) expect inflation to rise in H2 2021 and, as a result, 69 percent of respondents want executives to address it this earnings season.
‘The level of inflation is pervasive and there’s likely to be a longer-tail impact than what is expected given the need for price increases to work their way through the system,’ says Rebecca Corbin, founder and CEO of Corbin Advisors
‘Some of the inflation we’re seeing – such as increased wages, higher minimum wage and so on – do not seem transitory. And those types of changes are leading, and will continue to lead, to derivative inflation.’
Green light for investor day travel in 2022
This quarter, Corbin Advisers also surveyed the buy side on its intentions for work-related travel in the near future. Respondents are split exactly down the middle when asked whether they will travel to an in-person investor day during H2 2021.
But the majority of investors (86 percent) say they will be able to travel for in-person investor days from 2022 onwards. Only 3 percent say they don’t plan to travel for investor days ever again. Once travel resumes for investors, 84 percent view attending in-person days as a high priority.