Time to Celebrate

Analysts, once known for generously extending compliments during earnings calls, are now adopting a more restrained approach according to a Bloomberg news article this week. Positive accolades like “Great quarter,” “Way to go” or “Congratulations” are down 29% this year, making it the biggest annual decline since the Great Recession.  

Against the current backdrop of economic uncertainty — higher costs, rising rates, and escalating geopolitical tensions, analysts have adopted a less than optimistic stance toward corporate executives. Although recent quarterly results for S&P 500 companies have not been dismal — indeed, 82% have surpassed analysts' earnings expectations, boasting an average beat of 7.6%, double last year's average—the applause has been muted.

The story takes a complete turn when considering feedback given by analysts on small cap performance. In this case, they are much more inclined to praise performance, even if it isn’t surprising. The unique risk profiles and market behaviors of small caps may be the cause of analysts' different behavior. However, analysts' commentary is usually dependent on how adeptly these smaller companies navigate the challenges from quarter to quarter, demonstrating a nuanced interplay between optimism and good sense.

Companies (we hope) didn’t overlook their accomplishments this quarter, but celebrated them as a team internally. While external validation can be incredibly valuable, recognition inside an organization can serve as a huge motivational tool, encouraging employees to strive for exceptional results. It also reinforces a positive feedback loop while promoting a culture of continuous improvement, which, in the long run, can contribute to sustained resilience in the face of uncertainty.

So, if you didn’t get a pat on the back this quarter, you deserve one. After all, who knows your accomplishments better than the unsung hero in the mirror?