Indeed, since there were , Deloitte's analysis suggests that CFOs are generally much more optimistic across a range of indicators: profits, capital expenditures, and hiring. "Only one sticking point remains -- sales," Deloitte says.
The accounting firm's quarterly CFO review, involving 94 finance chiefs who responded to questions, is designed to track the actions -- and the opinions -- of finance executives from larger firms, averaging more than $5 billion in annual revenue. It covers five areas: CFO career, finance organization, company, industry, and economy. More than three-quarters of the respondents were from companies with more than $1 billion in annual revenues, and more than 71% represented public companies.
The optimism is being felt in expectations for year-over-year earnings growth, among other areas. CFOs now see 12.8% growth for 2012, compared with the 10.1% they saw last quarter. Capital investment expectations show a rise to 12% from 9.6%, while there's a doubling in domestic hiring projections, to 2.1% from 1%.
"Overall, CFO expectations are mirroring some of the positive activity we are seeing in the U.S. economy," according to Sanford Cockrell III, Deloitte LLP's national managing partner, CFO Program, "including their prospects for increased investment, particularly in M&A." But he adds, in , that "CFOs remain concerned about economic uncertainty, particularly in Europe, and are keenly aware of how tensions in the Middle East as well as potential 'black swan' events could derail a fragile recovery."
That's where the concern about revenue comes in. The surveyed finance chiefs expect an average of 5.9% in sales gains, compared with the 6.3% revenue-gain expectations in the previous quarter. The latest quarter's result is a low for the survey. (The U.S., as opposed to the North America expectation, is 5.2%.) And it is the eighth straight quarter in which CFO earnings projections have outpaced their sales expectations.
"Improving earnings, investment and hiring projections in the face of slowing revenue growth suggest CFOs have confidence in their companies' ability to get even more efficient," says Greg Dickinson, who leads the Deloitte CFO Signals survey. "But if efficiency improvements fall short or if companies continue to be hit with rising input costs, their renewed optimism may be short lived."
The survey indicated that CFOs are only cautiously optimistic about cash deployment, with 27% planning "a solid dose of domestic investment," as Deloitte put it, and 24% seeing liquidity maintenance. Paying down debt is envisioned by 13%.
Were taxes not a factor, CFOs said, they would invest more at home. Half say they will increase domestic investment, with one-third saying they will pay down more debt, and one-third aiming to increase dividends.
Also, the CFOs say that 20% of their cash is held offshore, with the total being 24% among U.S. finance chiefs.
Mergers and acquisitions were the focus of most spending. And while only one out of five companies is actively pursuing a major deal, nearly 55% actively seek smaller strategic deals. The primary focus of most deals appears to be achieving growth, synergies and scale efficiencies around existing businesses.
Listing their companies' top three challenges CFOs say they include revenue growth from existing markets (60%), along with hiring and retaining talent, and prioritizing investments. The framing or adapting of strategy declined as a priority to 27% from 40% last quarter.
The focus on revenue continues, with 57% of companies' seeing revenue growth or preservation as a priority (37% in existing-market revenues and 20% in new markets). The focus on indirect costs dipped to 11% from 14% in the survey, while the focus on direct costs rose.
Deloitte offers more information about its survey, and a chance to participate in future surveys, at NACFOSurvey@deloitte.com.