April 28, 2023
Industrials Sector Beat
By providing The Big So What™, we inform, inspire, and influence positive change
With 53% of the S&P 500 reporting earnings to date, 78% have reported a positive EPS surprise, above the 1-year average of 73%. Companies are reporting earnings 7.7% above consensus estimates, well above the 1-year average of (+2.8%) but below the 5-year average (+8.4%).
We analyzed annual revenue and EPS guidance provided by 30 industrial companies with market caps greater than $500M that have reported to date. Below are our findings.
Corporates are playing to the under promise and over deliver agenda this year, a good strategy amid continued uncertainty:
- EPS: 56% maintained, 41% raised, 3% lowered
- Revenue: 68% maintained, 24% raised, 8% lowered
Further, we analyzed the earnings calls for this group and the broader industrial universe to identify key themes.
- Macro Outlook: All Eyes on the Consumer as Most Expect Turbulence in 2023, Particularly in Residential and Freight; Executives Lean on Secular Growth Messaging as Stimulus Tailwinds Begin to Materialize
- Backlog & Order Rates: Backlogs Appear Largely Healthy; Analysts Tune Into Book-to-Bill to Decode Supply and Demand, Questioning Whether It’s Backlog Digestion or More Indicative of a Broader Demand Slowdown
- Supply Chain: Constraints Largely Easing and Focus Centers on Strengthening, Including Continued Mentions of Reshoring
- Capital Allocation: Growth Investments Remain En Vogue While Questions Focus on M&A Appetite Given Well-Capitalized Balance Sheets
- Margins: Persistent Elevated Inflation and Lower Volume Mentions Driving Continued Pricing and Expense Management Actions to Offset Pressures
- Regional Spotlight: China – Executive Calculus Equates Reopening with Recovery; While Some Are Not Seeing Benefits Yet, Positive on the Balance of the Year and Beyond
Corbin Advisors 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.