It was a truly great quarter for “great quarter” mentions on Wall Street

Happy days.
Happy days.
Image: Reuters/Brendan McDermid
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Great quarter, guys.

Executives are celebrating booming sales as the US stock market sets record high after record high: The words “great quarter” and their synonyms were mentioned during earnings calls a record 327 times in August, according to call transcript data compiled by Sentieo. “Congratulations” also had a strong showing.

Corporate executives and analysts aren’t wrong. A record percentage of companies in the S&P 500 Index of large US stocks have said revenue came in higher than estimates during the second quarter, according to FactSet. Profits have smoked expectations—87% of enterprises in that index reported a positive surprise in earnings-per-share. Investment banks think profits will grow more than 20% in the second half of the year.

Companies in healthcare, communications services, consumer staples, and information technology led reports of revenue exceeding estimates. In all four of those sectors, more than 90% of the firms blew away sales expectations.

Cyber security firm CrowdStrike, whose stock price is up about 30% this year, got a “congrats on a great quarter” from Tal Liani at Bank of America Securities. An analyst at Stephens congratulated medical device company Cooper Companies, up 26% in 2021, “on the record quarter.” Both firms are outpacing the broader S&P 500’s 21% gain.

The CFO of team-management software maker Asana, whose stock has more than tripled this year, gave kudos to his own company: “We’re very excited to report another great quarter.”

Why the stock market is at a record high

Several factors are underpinning the buoyant results and a heady stock market. Lawmakers in Washington have splashed trillions of dollars of spending to propel the economy, leaving companies, banks, and consumers relatively flush with cash. The Federal Reserve has played a key role by balancing inflation worries with robust economic expansion, said Randy Frederick, managing director of trading and derivatives for the Schwab Center for Financial Research. Fed chair Jerome Powell has been gradually signaling policy changes for months to avoid unnerving investors, and short-term interest rates are unlikely to increase for another year, Frederick said.

That said, there are signs that Covid-19 could take another bite out of the economy. The average number of new daily cases in the US has climbed to about 150,000 as infections from the delta variant surge. The US added far fewer jobs last month than economists expected, a development widely attributed to the spread of the highly-contagious variant. The job market stumbled just as a lifeline for millions of unemployed comes to an end, leaving more than 7 million Americans without jobless benefits.

For now, the stock market is taking those risks in stride, perhaps because investors think policy makers would step in with more support if it was needed.

In the meantime, the best performing company in the S&P 500 was bereft of “great quarter” mentions in its latest call with analysts.  Moderna’s revenue shot up to $6.3 billion in the first half of 2021, compared with $75 million during the same period a year ago. The pharmaceutical firm’s stock has rocketed nearly 300% in 2021.

Corinne Le Goff, chief commercial officer of the company behind the widely used Covid-19 vaccine, merely called it a “productive quarter.”

And the stock of Zoom Video Communications, a big winner during lockdowns last year, has fallen 12% in 2021. The video-calling software company posted  second-quarter earnings that exceeded analyst forecasts, but its results also signaled slowing growth.

Nonetheless, an analyst was enthused about Zoom’s latest results: “Great quarter again, guys,” said Oppenheimer’s Ittai Kidron.