Corbin Advisors Releases Q2’21 Inside The Buy-Side® Earnings Primer®
Record Earnings Beats and Revenue Guidance Raises Expected but Bullish Investor Sentiment Pulls Back Slightly
- 87% of surveyed investors and analysts expect Better Than sequential earnings
- 60% believe Q2’21 earnings will be Better Than consensus, in line with last quarter’s record number
- Average 2021 U.S. GDP forecasts increase to 6.5% on average from 5.5% last quarter and 4.0% at the start of 2021
- 71% expect companies to Raise annual revenue guidance this quarter, while 23% believe they will Maintain
- 86% describe executive tone as upbeat, in line with last quarter’s record, while 68% describe themselves as Neutral to Bullish or Bullish, down from 75% last quarter amid inflation and supply constraint concerns
- 66% identify inflation as the most significant concern, with 69% expecting inflation to continue to increase in the back half of 2021
FARMINGTON, CT – July 15, 2021 – Corbin Advisors, a strategic consultancy accelerating value realization globally, today released its quarterly Earnings Primer®, which captures trends in institutional investor sentiment. The survey, which marks the 47th issue of Inside The Buy-Side®, was conducted from June 9 to July 7, 2021 and is based on responses from 75 institutional investors and sell side analysts globally, representing more than $4.8 trillion in equity assets under management.
Following three consecutive quarters of increasing bullishness and record positive investor sentiment last quarter as revenue growth exuberance accelerated amid the vaccine rollout, our survey finds investor sentiment remains upbeat but ebbed slightly given increasing concerns with inflation.
While 86% of surveyed investors describe executive tone as upbeat, in line with last quarter’s record, 68% of investors and analysts describe their own sentiment as Neutral to Bullish or Bullish, down from a record 75% last survey. Weighing on exuberance of yore is inflation, the leading identified concern for the second consecutive quarter, which is cited by 69% of investors. This is more than double QoQ and relative to other identified concerns, including COVID-19 Variants (38%), Geopolitics (27%) and Monetary Policy (26%). Views from respondents were captured ahead of the U.S. Consumer Price Index reported increase of 5.4% on Tuesday, July 13, the highest 12-month rate since August 2008.
Still, near-term expectations for company results are elevated, as nearly 90% believe second quarter earnings will Improve sequentially, exceeding last quarter’s record high, and 60% believe earnings will be Better Than consensus, in line with last quarter’s high watermark. Organic growth and free cash flow expectations are also strong, with nearly 70% anticipating both will Improve sequentially. As a result, 71% anticipate companies will raise annual guidance this quarter.
Kim Forrest, Founder and Chief Investment Officer at Bokeh Capital Partners commented, “Companies have largely been extremely conservative for the past year. Now that the economy is clearly continuing to improve, they are going to be forced to give better guidance.”
“After a record number of earnings beats last quarter, investors are once again baking in more of the same and expectations for second quarter earnings performance are high, especially given easy year-over-year comparisons,” said Rebecca Corbin, Founder and CEO of Corbin Advisors. “Near-term growth and free cash flow expectations also remain elevated but investors are becoming more quickly concerned with inflation. The big question is whether inflation is ‘transitory’, as per the Fed’s nomenclature, or whether these will extend into 2022 and beyond. 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. Some of the inflation we’re seeing – such as increased wages, higher minimum wage, etc. – do not seem transitory. And those types of changes are and will continue to lead to derivative inflation.”
Regarding sector sentiment, the majority saw a pullback in bullish sentiment. Financials, Technology and Industrials register the highest levels of bullishness, while Energy, REITs and Utilities see the most bearish sentiment.
About Corbin Advisors
Since 2007, Corbin Advisors has tracked investor sentiment on a quarterly basis. Access Inside The Buy-Side® and other research on real-time investor sentiment, IR best practices and case studies at corbinadvisors.com.
Corbin is a strategic consultancy accelerating value realization globally. We engage deeply with our clients to assess, architect, activate, and accelerate value realization, delivering research-based insights and execution excellence through a cultivated and caring team of experts with deep sector and situational experience, a best practice approach, and an outperformance mindset.
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