Thursday, November 23, 2022
 
The Zacks Research Daily presents the best research output of our analyst team. Today's Research Daily features an update on the Q3 earnings seaosn that is heading towards a close and new research reports on 16 major stocks, including Linde plc (LIN), Texas Instruments Incorporated (TXN) and Trane Technologies plc (TT). 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 >>>

Q3 Earnings Season Scorecard

With results from 486 S&P 500 members or 97.2% of the index's total membership already out, the Q3 reporting cycle has effectively come to an end. Total earnings for these companies are up +2% from the same period last year on +11.7% higher revenues, with 69.5% beating EPS estimates and 68.5% beating revenue estimates.

As we have consistently pointed out, the Q3 EPS and revenue beats percentages are below what we had seen from the same group of companies in the last few reporting cycles, buth otherwise in the historical ranges, albeit towards the lower end of the ranges.

For 2022 Q4, total S&P 500 earnings are currently expected to be down -5.6% from the same period last year on +4.4% higher revenues. Estimates have been steadily coming down, with the current -5.6% expected earnings decline down from +1.7% at the start of the quarter. Excluding contribution from the Energy sector, 2022 Q4 earnings for the rest of the index would be down -10.2% from the same period last year.

For full-year 2023, S&P 500 earnings are currently expected to be up +2.6% on +2.4% higher revenues.

Estimates have consistently come down since peaking in mid-April, with aggregate S&P 500 earnings down -8.8% as a whole and -11.7% excluding the Energy sector. 

Earnings estimates have come down for 13 of the 16 Zacks sectors, with the biggest declines for the Construction, Retail, Consumer Discretionary, Technology, Basic Materials, Industrial Products and other sectors. 

Today's Featured Research Reports

Linde’ shares have gained +2.9% over the past year against the Zacks Oil and Gas - Field Services industry’s gain of +18.4%. Its process gas, like hydrogen, is being utilized for clean fuels, while its high-purity and specialty gases are employed to manufacture electronics. Linde has long-term contracts with on-site customers backed by minimum purchase requirements, thereby securing stable cashflows.

The firm reported strong third-quarter results, owing to increased prices and volumes across all end markets, except for healthcare. However, the cost of sales continues to increase, hurting the firm’s bottom line. The firm has mostly been paying a lower dividend yield than the industry’s composite stocks over the past two years.

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

Shares of Texas Instruments have declined -8.0% over the past year against the Zacks Semiconductor - General industry’s decline of -41.2%. While supply chains have started easing, they still remain a headwind, as are the new export restrictions to China. The company’s weak outlook for fourth quarter shows signs of deteriorating chip demand. This remains a major concern. Further, softness in the personal electronics and industrial end-markets remains an overhang.

However, continued rebound in the automotive market was a tailwind. Growing momentum across the communication equipment and enterprise systems markets drove the results further.  

Additionally, strong performance of Analog and Embedded Processing segments contributed well. Solid investments in new growth avenues and competitive advantages remain tailwinds.

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

Shares of Trane Technologies have declined -8.6% over the past year against the Zacks Technology Services industry’s decline of -62.4%. The company’s product and service diversity put Trane in the face of fierce competition in terms of price, quantity, delivery, service, support, technology and innovation. The company’s business experiences seasonal fluctuations in revenues. Lower liquidity remains a concern. Partly due to these headwinds company’s bottom line gets effected.

However, Trane Technologies remains focused on improving the quality of its products and services and operating efficiencies to achieve sustained improvement in earnings and cash flow. It prioritizes improving its business operating system and innovation through business transformation initiatives and prudent investments.

Trane has a track record of repurchasing shares and paying dividends consistently. Such moves instill investor confidence and positively impact the company's bottom line.

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

Other noteworthy reports we are featuring today include Eni S.p.A. (E), PACCAR Inc (PCAR), and AmerisourceBergen Corporation (ABC).

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>>>