News

An examination of Materials sector earnings announcements this quarter finds an improving executive tone.

Many observed a cautious consumer environment through the first three months of the year, leading to subdued traffic, sales, and a more competitive landscape overall, especially in regions like China where recovery has been slower than expected.

While performances have varied from company to company, in aggregate, Industrials currently represent the only sector in the S&P 500 where the majority of reported top-line figures have come in below consensus.

This earnings season, Banks highlighted the enduring benefits of scale and deposit stickiness in an economy buoyed by low unemployment and persistent consumer spending.

In line with findings from our Inside The Buy-Side® Earnings Primer®, commentary from earnings call thus far reveal a cautiously optimistic tone among executives.

Heading into this past earnings season, our Q4’23 Inside The Buy-Side® Earnings Primer® registered a more optimistic tone overall after last quarter’s survey found sentiment increasingly trending neutral.

This week, we’re covering Materials in our Sector Beat — a must read if you’re interested in gleaning insights into broader economic indications for 2024.

Technology continues to dominate headlines and for good reason: the sector is experiencing somewhat of a renaissance. Developments in AI are hitting the market at an unprecedented cadence, with those companies most able to benefit from the AI revolution in the near term seeing actual and expected earnings rise along with stock multiples.

Similar to commentary we observed in our Big U.S. Banks Sector Beat, management teams continue to see consumer spending normalizing, but overall better than feared as some investors and corporate executives had been bracing for recession risk in early 2024.

In our early analysis of industrial earnings thus far, “stability” was the common tone evoked on calls — a welcomed message from one of the economy’s largest constituencies, and a far cry from recession projections heard throughout much of last year.