Tuesday, July 26, 2022
 
The Zacks Research Daily presents the best research output of our analyst team. Today's Research Daily features a real-time scorecard of the onoging Q2 earnings season and new research reports on 16 major stocks, including Broadcom Inc. (AVGO), Oracle Corporation (ORCL), and Danaher Corporation (DHR). These research reports have been hand-picked from the roughly 70 reports published by our analyst team today.
 
You can see all of today’s research reports here >>>

Q2 Earnings Season Scorecard

Including all the reports that came out before the market's open on July 26th, we now have Q2 results from 134 S&P 500 members or 26.8% of the index's total membership. Total earnings for these companies are down -5.8% from the same period last year on +7.9% higher revenues, with 73.9% beating EPS estimates and 64.2% beating revenue estimates.

This is the lowest EPS and revenue beats percentage for this group of 134 index members since the first quarter of 2020 and towards the low end of the 5-year range.

Weak earnings growth for the Finance sector is the primary reason the aggregate reported Q2 earnings growth rate is in negative territory. Excluding the -26.2% decline in Finance sector earnings, Q2 earnings growth for the rest of the index companies that have reported improves to +9.8%. Looking at Q2 as a whole, combining the actuals that have come out with estimates for the still-to-come companies, earnings are expected to be up +3.7% as a whole and +10% on an ex-Finance basis.

Estimates for the current period (2022 Q3) have started coming down, though persistent positive revisions to the Energy sector is partly offsetting those cuts, a trend that we saw with respect to Q2 estimates as well. Total Q3 earnings are currently expected to be up +6.1% on +9.2% higher revenues.

Excluding the Energy sector's substantial contribution, total Q3 earnnings for the rest of the index would be up only +0.6%, which is down from +2.1% growth expected at the start of July. For more details about the Q2 earnings season, please check out our weekly Earnings Preview report where this week provided a preview for the Tech sector >>>>Previewing Big Tech Earnings Ahead of a Huge Week for Wall Street 

Today's Featured Research Reports

Broadcom shares have outperformed the Zacks Electronics - Semiconductors industry over the past year (+11.1% vs. -1.1%) on the back of continued strength in networking and server storage segments. Networking is well-poised on strong adoption of Broadcom’s next-gen merchant switching and routing solutions by hyperscalers, enterprises and service providers.

It is benefiting from the world’s first complete end-to-end chipset solutions for the Wi-Fi 7 ecosystem. In the server storage connectivity domain, much of the growth is anticipated from the continued recovery of enterprise IT spending deployed toward upgrading computer services.

An upbeat third-quarter fiscal 2022 guidance is encouraging. The recently announced VMware acquisition will aid prospects in the long term. However, increasing competition, along with high debt levels, are persistent woes.

(You can read the full research report on Broadcom here >>>)

Oracle shares have declined -13.1% over the year-to-date basis against the Zacks Computer - Software industry’s decline of -24.1%. The Zacks analyst believes higher spending on product enhancements, especially toward the cloud platform, amid increasing competition in the cloud domain is likely to limit margin expansion.

However, ongoing momentum across its cloud business, driven by the strong uptake of Oracle Cloud Infrastructure services and Autonomous Database offerings. Solid adoption of cloud-based applications, comprising NetSuite Enterprise Resource Planning (ERP), Fusion ERP and Fusion Human Capital Management (HCM), bodes well.

Solid demand for the Oracle Dedicated Region Cloud customer is anticipated to drive the top line. Partnerships with Accenture and Microsoft is helping Oracle win new clientele. The company’s share buybacks and dividend policy are noteworthy

(You can read the full research report on Oracle here >>>)

Danaher shares have declined -5.7% over the past year against the Zacks Diversified Operations industry’s decline of -23.3%. The company’s cost inflation and woes related to supply-chain restrictions might be worrying for the company in the quarters ahead. High debts might inflate financial obligations and forex woes are likely to be concerning for Danaher.

However, Danaher’s diversified business structure allows it to mitigate risks in one end market with strength across others. The company stands to benefit from Danaher Business System (“DBS”), healthy rewards to shareholders, buyout benefits and product innovation in the quarters ahead.

It anticipates year-over-year core revenue growth of low-single digit for the second quarter of 2022. Danaher is slated to release second-quarter results on Jul 21. The impact of COVID-related testing is predicted to boost sales in the low-single digits for the second quarter

(You can read the full research report on Danaher here >>>)

Other noteworthy reports we are featuring today include Bristol-Myers Squibb Company (BMY), Deere & Company (DE) and Northrop Grumman Corporation (NOC).

Sheraz Mian
 
Director of Research

Note: Sheraz Mian heads the Zacks Equity Research department and is a well-regarded expert of aggregate earnings. He is frequently quoted in the print and electronic media and publishes the weekly Earnings Trends and Earnings Preview reports. If you want an email notification each time Sheraz publishes a new article, please click here>>>