Creating ideas you can test

Bloomberg Market Specialists Keith Gerstein, William Collins and Max Flanagan contributed to this article. The original version appeared first on the Bloomberg Terminal.

Background

Inflation pressures have affected many companies’ bottom lines this year, and the effect spans industries. Clorox Co. expects profit to take a hit this year as inflation and interest rates rise; BMW has benefited from record orders but expects demand to soften. And Beyond Meat’s plant-based meat alternatives are out of many consumers’ price range.

The issue

When coupled with supply chain issues, rising costs have left consumer-focused companies faced with major decisions on strategy. Some have raised prices; others have shifted inventory or even postponed initial public offerings.

For low-cost retailers, inflation raises questions about pricing strategy, with some competitors taking divergent paths. Among leading U.S. dollar-store brands, Dollar General Corp. stuck with its $1 roots, while Dollar Tree Inc. said last November it would raise its typical price to $1.25 impacting gross margins and same-store sales in 2022.

To see estimates for this company, type “Dollar Tree” on the command line of the terminal screen or the shortcut is {DLTR US <EQUITY> MODL <GO>}. To uncover how changes in estimates would affect other metrics, check out Bloomberg’s Interactive Calculator below:

Seven & i Holdings Co., the parent company of 7-Eleven, has faced tighter margins in recent years. Like many other convenience stores, the company chose to increase prices, in response to supply chain and inflationary pressures.

As prices rise, consumers are looking to trim spending. One of the first nonessential items to go is often entertainment. Such cutbacks have upended the streaming industry and are forcing companies to make bold and strategic moves to compete. For example, Netflix Inc. has been having a rough time, with subscribers hitting pause, and being the S&P 500’s worst performer this year through August 18th.

Netflix executives have been very vocal about their pricing strategies. To analyze these trends, you can use the enhanced Document Search function. Go to {NFLX US <EQUITY> DSCO <GO>}. This tool uses natural-language processing models to analyze transcripts for hundreds of key topics, so you can analyze trends in what companies are talking about.

High oil prices have been one of the main components of global inflation this year. Consumers are more likely to feel the burden because energy spending is difficult to avoid. Many U.S. workers need their gas tanks filled to get to work, for example. For oil major Exxon Mobil Corp., the value for the realized price of oil hit another record in 2022 Q2. Although there are decreases in costs at the pump, Q3 is shaping up to a similarly oil (US/BBL).

Tracking

Run {XOM US <EQUITY> MODL <GO>} and click on the graph icon to the left of Crude Oil (US/BBL) under Realized Price to chart Exxon’s realized price for crude. This year through August , consensus estimates for Exxon’s price had risen 66%.in both the already reported Q2 and upcoming Q3.

Run {XOM US MODL <GO>}

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