Key Takeaways:
S&P 500 companies mentioned oil prices on 149 earnings calls this spring, yet only seven cut their profit forecasts because of it.
The word "oil" appeared on 149 S&P 500 earnings calls from March 15 through June 5, the highest frequency since the pandemic-era oil surplus of early 2020, a FactSet analysis shows.
"Given the recent spike and volatility in fuel prices, we believe it is reasonable to assume some moderation over the balance of the year, rather than base our guidance on current elevated spot prices," Carnival CFO David Bernstein said on the cruise operator's earnings call.
Of the 86 companies that offered a full-year earnings-per-share outlook, 38 kept their profit forecasts unchanged while 34 raised them. Only nine cut guidance, and just seven directly cited oil prices as the reason. Four of those seven were airlines or cruise-ship operators, the most fuel-intensive sectors in the index.
United Airlines lowered its full-year outlook in April, saying it was trying to offer forecasts that "encompass multiple scenarios" as oil and gas prices remain volatile amid negotiations to end the fighting in the Middle East. Carnival cut its profit outlook but said travel demand remained strong.
The Iran war, which began Feb. 28, has pushed Brent crude to around $100 a barrel from a pre-war level of about $71, representing the largest energy supply disruption on record, according to the International Energy Agency. The Strait of Hormuz, through which one-fifth of global oil once flowed, remains largely closed.
Why Guidance Hasn't Cracked
The gap between CEO rhetoric and formal guidance reflects a widespread assumption that oil prices will moderate as the conflict evolves. Wall Street analysts expect S&P 500 earnings to grow 21.7% in the second quarter, which would mark the second consecutive quarter of growth above 20%, according to FactSet.
Big Tech's expanding profit margins have helped offset energy-cost pressure for the broader index. But retailers including Walmart and Target have signaled greater consumer caution, and persistent fuel costs could eventually force broader revisions if the war extends beyond current ceasefire talks.
The disconnect between what CEOs say and what they forecast creates downside risk. If oil prices stay above $100 through the second half, companies that held guidance steady may be forced to revise lower. Investors will watch the next round of earnings calls in July for any shift in tone.
This article is for informational purposes only and does not constitute investment advice.
