Key takeaways
- CFOs express concerns over new virus waves, more shutdowns, and the pandemic triggering a longer-term recession.
- Eighty-four percent of CFOs now say equity markets are overvalued — the second-highest level in survey history. Just 2% say markets are undervalued.
- On average, CFOs expect to achieve 74% of their originally budgeted 2020 revenue; there are substantial industry differences.
- Two-thirds of CFOs say they have raised or accessed additional cash, with most saying they are using it to fund cash reserves.
- Forty-two percent of CFOs say they are already at/above their pre-crisis operating level or will be by the end of 2020, but 25% say first quarter of 2022 or later.
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Why it matters to CFOs?
Each quarter, CFO Signals tracks the thinking and actions of leading CFOs representing North America’s largest and most influential companies. Since 2010, the survey has provided key insights into the business environment; company priorities and expectations; finance priorities; and CFOs’ personal priorities. Participating CFOs represent diversified, large companies averaging more than $10 billion in annual revenue.
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Assessment of markets and risk
This quarter, not surprisingly, the vast majority of CFOs mentioned worries related to COVID-19 — especially around new virus waves, further shutdowns, and unstable consumer health/demand. As stock markets continue to climb, 84% of CFOs now say equities are overvalued — the second-highest level in survey history — with just 2% saying markets are undervalued. Furthermore, with ongoing low-interest rates, debt attractiveness rose from 63% to 87%. After dipping to 27% last quarter, the proportion of CFOs saying it is a good time for risk taking rebounded to the pre-pandemic norm of 41% — still low relative to the levels from 2017 and 2018.
Current challenges
Overall, just 37% of CFOs say they expect to achieve 95% or more of their originally-budgeted 2020 revenue, and another 36% say between 75% and 94%. Health care/pharma, energy/resources, and financial services are the most optimistic, expecting an average of 95%, 83% and 79% of their targeted 2020 revenue, respectively. Retail/wholesale and manufacturing were the least likely to expect 95% or more of their target, with just 21% of their CFOs expecting to achieve this level.
Deloitte provides industry-leading audit, consulting, tax and advisory services to many of the world’s most admired brands, including nearly 90% of the Fortune 500® and more than 7,000 private companies. Our people work across the industry sectors that drive and shape today’s marketplace — delivering measurable and lasting results that help reinforce public trust in our capital markets, inspire clients to see challenges as opportunities to transform and thrive, and help lead the way toward a stronger economy and a healthy society. Deloitte is proud to be part of the largest global professional services network serving our clients in the markets that are most important to them. Now celebrating 175 years of service, our network of member firms spans more than 150 countries and territories.
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