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What factors will S&P 500 companies cite as negative impacts on Q1 Earnings and Sales?

By John Butters, Senior Earnings Analyst
Apr 12, 2015

While the majority of S&P 500 companies will report earnings results for Q1 2015 over the next few weeks, approximately 5% of the companies in the index (24 companies) have already reported earnings results for the first quarter. 

Given the projected earnings and revenue declines projected for the S&P 500 for the first quarter, have these companies discussed specific factors that had a negative impact on earnings or revenues for the first quarter during their earnings conference calls? 

To answer this question, FactSet searched for specific terms related to a number of factors (e.g., "currency," "Russia") in the conference call transcripts of the 23 S&P 500 companies that have conducted first quarter earnings conference calls through April 9 to see how many companies discussed these factors. FactSet then looked to see if the company cited a negative impact or expressed a negative sentiment (e.g., "volatility," "uncertainty," "headwind") regarding the factor for either the quarter just reported or in guidance for future quarters. 

Based on the earnings calls to date, the stronger U.S. dollar has been cited by the most companies in the index as a factor that either had a negative impact on earnings or revenues for Q1, or is expected to have a negative impact on earnings and revenues in future quarters. Of the 23 companies that have conducted earnings calls to date for Q1, 16 (or 70%) cited some negative impact or expressed a negative sentiment about the stronger dollar during the conference call.

The impact of the stronger U.S. dollar will likely be a factor cited by a number of S&P 500 companies on their earnings conference calls during the Q1 earnings season. During the course of the first quarter, the dollar strengthened relative to the euro. On December 31, one euro was equal to $1.21 dollars. On March 31, one euro was worth about $1.07 dollars.

The dollar has also strengthened relative to year-ago values for both the euro and the yen. In the year ago quarter (Q1 2014), one euro was equal to $1.37 dollars on average. For Q1 2015, one euro was equal to $1.13 dollars on average. In the year-ago quarter (Q1 2014), one dollar was equal to $102.76 yen on average. For Q1 2015, one dollar has been equal to $119.17 yen on average.

Get additional detail on the conference calls we studied and quotes from the transcripts in this week's full Earnings Insight report.

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