But a larger subset of companies have found themselves on the sidelines, cut off from their customers or facing little to no demand for their products.
“The recovery is not going to happen uniformly across all regions and it is not going to occur overnight,” Marriott CEO Arne Sorenson told analysts on Monday. “It may take longer than any of us would like.”
The path forward looks treacherous for companies in both groups, with coronavirus making it nearly impossible to plan for the future. But for the firms that haven’t been able to do business in a pandemic economy, the next few months will be make-or-break.
“It’s critically important how the reopenings go,” said Nick Raich, CEO of The Earnings Scout, a research firm that tracks corporate earnings.
Making it through
Few companies are booming in the current environment, but some are much better equipped than others to tap into the coronavirus economy.
The most visible example is the US tech giants. Like many companies, they’ve have had to deal with new challenges, such as supply chain issues. But the industry has largely benefited from the spike in remote work and higher online engagement.
“The technology sector has been practicing social distancing for some time,” Raich said, noting that many employees in the sector already worked frequently from home and sold products or services online.
But the longer the coronavirus drags on, even those companies that have endured relatively limited disruptions will begin to struggle. For instance, Netflix has filmed most of its content due out in 2020, but 2021 could be a different story.
Still, these companies at least have money coming in at this point. “[The] balance sheet makes all the difference here on who can ride it out,” said Peter Boockvar, chief investment officer at Bleakley Advisory Group.
Closed for business
For a more substantial group of companies — airlines, manufacturers, hotels and retailers, to name a few — access to the coronavirus economy has been severely limited or restricted entirely. These firms have pivoted into survival mode and are racing to conserve cash.
Executive chairman Bob Iger said he’s confident people will “resume familiar activities” once the crisis is over. But for now, the company remains under strain.
“Disney is built on shared group experiences,” analyst Richard Greenfield of Lightshed Partners said in a research note to clients. “Until there is global comfort health-wise with that behavior again, Disney’s earnings are fundamentally impaired.”
“The debt burden ultimately proved insurmountable, particularly given near-term operating challenges related to the coronavirus pandemic,” Fitch retail analyst David Silverman told clients.
A tale of two economies
All told, earnings season has made clear that more companies are struggling than flourishing right now.
Of the more than 430 companies in the S&P 500 that have reported first-quarter results, just 10% have raised their estimates for second quarter earnings, according to The Earning Scout’s Raich. That’s the lowest proportion since the 2008 global financial crisis.
“Everyone is getting affected by what’s going on negatively, it’s just a question of to what degree,” Boockvar said.
Companies are trying to stay realistic, and most have signaled they don’t expect business to recover anytime soon. Even so, those firms that have been barred from participating in the coronavirus economy will need some access to be restored soon, or layoffs will rise and some downsizing could become permanent.
That doesn’t mean all companies are rushing to open their doors again. Significant concern remains about whether easing quarantine restrictions could lead to a second wave of infections, which could spark another bruising round of shutdowns that may be too much for weakened businesses to withstand.
“If these reopenings don’t go well and it leads to extended closures in the future, no company will be immune to that, and they’ll all see earnings hit,” Raich said.
When stay-at-home orders are lifted, spaces like promenades, hotels, stores, and more will look quite different; plexiglass barriers will be installed between employees and customers, and temperature checks at the door will become mandatory.
But for many companies, that’s the best-case scenario.