Corbin Advisors Releases Q2’21 Inside the Buy-Side® Industrial Sentiment Survey
Despite Significant Spike in Inflation Concerns, Expectations for Top Line Blowouts this Quarter and Continued Growth in Back Half of 2021
100% of surveyed investors and analysts expect revenue to Improve sequentially while 65% anticipate EPS beats
85% expect companies to raise annual revenue guidance and 79% expect the same for EPS
96% describe management tone as Neutral to Bullish or Bullish, surpassing the previous record set last quarter
Despite rampant cost inflation, which is the top identified concern, 56% expect margins will be in line with Q1; fewer than 15% expect profitability to have Worsened
Growth remains in focus: 84% cite reinvestment as the preferred use of capital and appetite for M&A also increases, with 91% in favor of bolt-on deals
HARTFORD, CT – July 22, 2021 – Corbin Advisors, a strategic consultancy accelerating value realization globally, today released its quarterly Industrial Sentiment Survey. The survey, part of Corbin Advisors’ Inside The Buy-side® publication, is based on responses from 35 institutional investors and sell side analysts globally who actively cover the industrial sector. Buy side firms manage more than $1.8 trillion in assets and have ~$160 billion invested in industrials.
Our survey finds continued upbeat investor sentiment but registers a slight pullback for the first time following the
COVID-19 pandemic onset, which saw four consecutive quarters of increasingly bullish attitudes since last year’s Q2 crater. While a record 96% of surveyed investors and analysts describe management tone as Neutral to Bullish or Bullish, surpassing the previous high set last quarter, those describing their own sentiment as Neutral to Bullish or Bullish registers 70%, down from 77%.
For Q2, 100% expect revenue to Improve sequentially, the first ever unanimous consensus registered in our survey’s history, while 71% believe earnings will also Improve, though slightly lower than last quarter’s 83%. Relative to consensus, 65% expect Q2 earnings beats. Even more, 85% expect companies who issue revenue guidance to raise and 79% anticipate the same for EPS.
Tempering views somewhat, 9 in every 10 investors, or 88%, identify inflation as the most significant concern, up from 55% last quarter and, as a result, 46% cite margins as the leading topic for executives to address on upcoming earnings calls, nearly three times higher than last quarter. In addition, the COVID delta variant (56%), supply issues
(26%) and consumer confidence (26%) weigh on sentiment.
Nick Heymann, Co-Group Head-Global Industrial Infrastructure at William Blair commented, “I expect industrial earnings to come in better than expectations; reacceleration production ramp is managing to more than offset rising input costs, logistics and labor shortages so far, as breadth of revenue expansion broadens to virtually all markets.”
“Despite pervasive cost inflation across goods and services, the quickly spreading delta variant and supply constraints, Industrial executive and investor optimism remains elevated amid soaring global demand, which to date has not been impacted by across-the-board higher prices. In focus this quarter will be margin sustainability amid the growing pressures,” said Rebecca Corbin, Founder and CEO of Corbin Advisors. “Companies are delivering record Q2 top lines and seeing continued backlog growth, in line with expectations, and while executives are addressing the challenges head-on, 2021 revenue and EPS guidance raises and messaging on continued momentum into 2022 paint a very rosy picture. Amid growing stockpiles of cash, investors are supportive of reinvestment, and appetite for M&A is also up, with over 90% of survey respondents in favor of bolt-ons. Further indicating comfort, the majority are supportive of levering up as high as 4.5x to fund deals in the current environment and north of 70% identify consolidation stories as the most compelling investment theme, up from just 12% last quarter.”
In terms of sector bets, Non-Resi. Construction saw the biggest swing in positive sentiment, with Machinery, Industrial Equipment & Components and Agriculture registering the most upbeat sentiment. Notably, Resi. Construction and Building Products registered the largest pullbacks in 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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