More than 1,400 corporate calls preparing investors and suppliers for the fallout of coronavirus — Apple, Microsoft and Walmart among them — have mentioned the outbreak at least 11,000 times collectively, according to transcripts.
That tally — which also includes cruise lines such as Carnival /zigman2/quotes/202325446/composite CCL -1.19% , worried about bookings, and toy maker Hasbro /zigman2/quotes/201249319/composite HAS +0.07% , which sources two-thirds of its merchandise from China — was tracked by natural language processing company Amenity Analytics, through this week.
Amenity’s model extracted 11,341 unique sentences related to coronavirus and health epidemics in 1,787 company earnings calls held so far in 2020, said Derek William Valles, senior equity research analyst with Amenity. For reference, extracted text includes direct mentions by analysts and management as well as all answers to questions about the outbreak (for example, management might answer a coronavirus question by discussing inventory levels or customer traffic expectations, etc.).
Credit Suisse analysts wrote Monday that they expect the “brunt of the economic/earnings impact” in the second quarter of 2020, with the first-quarter impact likely to be modest.
Market data firm FactSet has taken its own look at trends in EPS estimates as the stock market buckles under the strain of the economic uncertainty from the health crisis, as well as from a sharp retreat in oil prices.
The tumble in the S&P 500 /zigman2/quotes/210599714/realtime SPX +0.48% , down more than 13% to date in 2020, mostly “has been attributed to fear and uncertainty about the impact of the coronavirus on the global economy. Given these concerns, analysts also have lowered earnings estimates during the first two months of the quarter for companies in the S&P 500,” said John Butters, an analyst at FactSet.
As of the end of February, 68 S&P 500 companies had issued EPS guidance below the expectations of analysts for the first quarter, Butters said. This number is below the five-year average of 75.
More warnings may be in the offing as a number of S&P 500 companies stated they were unable to quantify an impact from the coronavirus or did not include an impact from the coronavirus in their guidance.
The heads of the SEC and the Public Company Accounting Oversight Board urged public companies to collaborate with their auditors “to ensure that financial reporting, auditing and review processes are as robust as practicable in light of the circumstances” of the outbreak, the Wall Street Journal has reported.
Among the first to warn, Apple /zigman2/quotes/202934861/composite AAPL -0.10% said it doesn’t expect to meet second-quarter financial guidance because production has slowed or been halted in China due to the outbreak, the company said in a statement last week.
Apple generates about 15% of its revenue from China, and many of its products, including its popular iPhone, are manufactured there. The novel coronavirus was first detected in December in the tech manufacturing hub of Wuhan, China.
Microsoft /zigman2/quotes/207732364/composite MSFT +1.02% , meanwhile, warned that it will not meet guidance for its third quarter due to COVID-19. While there’s “strong” demand for Windows in line with the company’s expectations, the supply chain “is returning to normal operations at a slower pace than anticipated,” executives there said.
Walmart /zigman2/quotes/207374728/composite WMT +0.30% anticipates a financial impact in the first quarter and potentially the second quarter to its China business. “Due to the current sales mix slanted heavily toward food and consumables, as well as some increased expenses related to the outbreak, we could see a couple of cents negative impact in [the first quarter],” CFO Brett Biggs said on an earnings call.
Coronavirus update: 111,356 cases, 3,892 deaths; Italian stocks dive
There are a total of 111,356 cases and 3,892 deaths of the coronavirus named COVID-19. More than 62,000 people have recovered. In the U.S., there are 564 cases and 22 deaths.
China has now reported about 72% of total cases and 77% of deaths worldwide, down from an earlier 89% share of cases and 95% share of deaths. It’s a shift that demonstrates how quickly the outbreaks in Iran, Italy and South Korea have expanded.
Jaimy Lee contributed to this report .