A Plethora of Shortage Talk

While inflation is sure to dominate earnings calls, a related topic could ultimately define the coverage: shortages. Have supply chains eased? Has demand changed? How long are companies waiting to get parts from overseas?

Tonight, Apple shares fell more than 1% in late trading -- a substantial after-hours move for the tech giant -- following a Bloomberg report that the company was cutting its iPhone 13 production because of parts shortages.  This shouldn't exactly be news to investors; Apple has previously warned of components shortages for the iPhone. 

Even so, just mentioning the word shortages seems to get stocks moving these days. And that's one reason the next few weeks of earnings reports should prove particularly interesting. 

Over the last three months, roughly 160 companies in the S&P 500 cited shortages in their quarterly filings with the Securities and Exchange Commission, according to a search in financial research platform Sentieo. That's roughly double the figure from two years ago.

Leggett & Platt, a maker of fabrics and materials for homes and cars, won the award for most shortage talk. It mentioned the term 46 times in its last quarterly filing. Car dealer AutoNation came in second place with 19 mentions. 

Shortages don't get equal treatment by the market, though. Leggett & Platt shares are up just 2% over the last months, versus a 24% gain for the market. Meanwhile, AutoNation has soared 92%. 

It's all the more reason to pay attention to the details this earnings season. We'll be watching and reporting back.