Commencing the Quarter — Q2’24

In advance of publishing the 59th issue of Corbin Advisors’ Inside The Buy-Side® Earnings Primer® next week, we analyzed the earnings communication trends of 30 off-cycle companies reporting between June 3 and July 3, 2024, to identify important themes and precedence. These companies span market cap sizes and sectors. 

In line with preliminary findings from our Inside The Buy-Side® Earnings Primer® — to be released next week — commentary from recent earnings calls reveals a pullback toward more neutral sentiment and tempered (albeit not overly pessimistic) outlooks. This marks a shift from the first six months of the year when executives widely anticipated a rate cut environment to fuel expected stronger performance in the latter half of 2024. 

Inflation and economic instability, amplified by the upcoming elections, have resulted in selective spending and heightened financial anxiety among consumers, particularly among low-income shoppers. Pricing power is under pressure, and retail and consumer-facing companies are responding with aggressive promotions to maintain customer loyalty and drive traffic, despite the pressure on margins.  

Demand remains “consistent” across various sectors, though not blockbuster. The technology sector, particularly in AI and infrastructure, continues to see positive momentum, while traditional segments like construction and manufacturing anticipate benefits from ongoing and future government infrastructure spending. However, certain verticals, such as office and commercial construction, continue to be mired in an economic slowdown. 

Geographically, the European market continues to be beset by geopolitical uncertainties and high costs, with consumer confidence remaining low. Furthermore, China is experiencing “souring” fundamentals as store traffic declines weigh on sales. Mexico stands out as a relative bright spot, attracting strong investment in manufacturing and supply chain opportunities as the country benefits from palpable nearshoring trends. 

Key themes from our analysis below: 

• Outlook — Executive Sentiment Sees an Injection of Cautiousness amid Mixed Economic Signals, a Continued High Interest Rate Environment, and Election-induced Uncertainty; ‘It’s Hard to Forecast What the Economy is Going to Do’
• Consumer — Execs Transmit Consumer Anxiety as Selective Spending Habits Among Low-Income Shoppers Intensifies; Retail and Consumer-Facing Companies Push Promotions and Emphasize Value Proposition
• Demand and Growth — Companies Report ‘Consistent’ and ‘Moderate’ Volume for Now; AI and Infrastructure Tailwinds Continue to Underpin Optimism
• Margins — Amid Pricing Pressures and Persistent Inflation, Execs Turn Challenges into Opportunities by Enhancing Value Propositions to Capture Market Share; Digital Capabilities / AI Continue to be Deployed to Enable Greater Efficiency
• Election — From Low Visibility to Consumer Caution to Promotional Challenges, Elections in the U.S. and EU Leave a Series of Hurdles and Opportunities in Their Wake; Expect Analyst Questions on Upcoming Calls
• Around the World — The EU and UK Face Continued Challenges amid Geopolitical Uncertainty and High Costs, While China Sees Declining Consumer Sentiment and Traffic; In LATAM, Mexico Emerges as a Bright Spot with Strong Investment in Manufacturing and Supply Chain Opportunities, But Exhibits Mixed Consumer Trends along with Brazil