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No one is expected to pay attention to earnings given the unexpected Brexit vote, but the Q2 earnings season has gotten underway, with results from 10 S&P 500 members already out. All of these early reporters, which includes major operators like FedEx (FDX - Free Report) , Oracle (ORCL - Free Report) and Adobe (ADBE - Free Report) , have fiscal quarters ending in May, but get clubbed as part of the June quarter tally. We have another 11 index members with fiscal quarters ending in May on deck to report results this week. All in all, we will have seen Q2 results from almost two dozen S&P 500 members by the time Alcoa (AA - Free Report) comes out with its results on July 11th.
The chart below shows the weekly calendar of earnings releases for the entire Q2 earnings cycle. As you can see, we are about three weeks away from the reporting cycle really ramping up.
Expectations for the Quarter
Total earnings for the 10 index members that have reported results are up +4.1% on +4.2% higher revenues, with 60% beating EPS estimates and equal proportion coming ahead of top-line expectations. Comparison of the Q2 results thus far with prior periods offers a mixed picture. But it’s likely too small a sample to draw any conclusions from in any case.
For Q2 as a whole, total earnings for the S&P 500 are expected to be down -6.1% on -0.7% lower revenues, with growth in negative territory for 9 of the 16 Zacks sectors. As has been the pattern in other recent periods, the Energy sector remains the biggest drag on the aggregate growth picture, with total earnings for the sector expected to be down -78.9% on -27.1% lower revenues. Excluding the Energy sector, earnings for the rest of the index would be down -2.7%.
The table below shows the summary picture for Q2 contrasted with what was actually achieved in the preceding period.
Estimates for Q2 faithfully followed the well-trodden path of previous quarters, as the chart below shows.
As negative as this revisions trend looks, it is nevertheless an improvement over what we had seen in the comparable period(s) in other recent quarters. The improved commodity-price backdrop and the reduced dollar drag are some of the explanations for this development. It will be interesting to see if this trend of decelerated negative revisions will continue this earnings season. But we will have to wait a few more weeks to get a better read on this development after companies start reporting June quarter results and guide towards Q3 estimates. Current estimates for Q3 are showing flat growth from the year-earlier level.
Expectations Beyond Q2
The chart below shows current quarterly earnings growth expectations for the index in 2016 Q2 and the following four quarters contrasted with actual declines in the preceding three quarters. As you can see, growth is expected to be negative in 2016 Q2 and flat in the following quarter.
The only meaningful positive earnings growth this year is expected to come from the last quarter of the year, which is then expected to continue into 2017 when earnings for the S&P 500 index are expected to be up in double-digits. We will see if those estimates will hold up as we reach the last quarter of the year. But given what we have seen over the last few quarters, the odds don’t look that favorable.
Note: Want more articles from this author? Scroll up to the top of this article and click the FOLLOW AUTHOR button to get an email each time a new article is published.
Note: For a complete analysis of 2016 Q2 estimates, please check out weekly Earnings Trends report.
Here is a list of the 32 companies reporting this week, including 11 S&P 500 members.
Company
Ticker
Q0 EST
Year Ago
Last EPS Surprise
Report Date
Time
SUPERCOM LTD
SPCB
0.03
0.21
0.00%
Monday
BTO
CARNIVAL CORP
CCL
0.39
0.25
25.81%
Tuesday
BTO
CARNIVAL PLC
CUK
N/A
0.25
25.00%
Tuesday
BTO
IHS INC-A
IHS
1.14
1.18
8.82%
Tuesday
BTO
BARNES NOB EDUC
BNED
-0.11
N/A
0.00%
Tuesday
BTO
FACTSET RESH
FDS
1.63
1.42
4.61%
Tuesday
BTO
NIKE INC-B
NKE
0.48
0.49
14.58%
Tuesday
AMC
SCHULMAN(A) INC
SHLM
0.78
0.72
14.81%
Tuesday
AMC
AEROVIRONMENT
AVAV
-0.08
0.32
440.00%
Tuesday
AMC
CALAMP CORP
CAMP
0.17
0.24
0.00%
Tuesday
AMC
NOVAGOLD RSRCS
NG
N/A
-0.03
0.00%
Tuesday
N/A
GENL MILLS
GIS
0.6
0.75
4.84%
Wednesday
BTO
MONSANTO CO-NEW
MON
2.41
2.39
-1.22%
Wednesday
BTO
ACUITY BRANDS
AYI
1.97
1.37
13.33%
Wednesday
BTO
UNIFIRST CORP
UNF
1.37
1.61
-7.20%
Wednesday
BTO
OMNOVA SOLUTION
OMN
0.14
0.11
300.00%
Wednesday
BTO
PIER 1 IMPORTS
PIR
-0.06
0.08
9.52%
Wednesday
AMC
EXFO INC
EXFO
0.05
0.02
50.00%
Wednesday
AMC
INVESTORS RL ES
IRET
0.14
0.16
8.33%
Wednesday
AMC
PROGRESS SOFTWA
PRGS
0.21
0.27
-5.26%
Wednesday
AMC
XPLORE TECH CP
XPLR
0.01
-0.05
-12.50%
Wednesday
AMC
8POINT3 ENERGY
CAFD
-0.02
N/A
307.69%
Wednesday
N/A
WORTHINGTON IND
WOR
0.63
0.52
-4.17%
Wednesday
N/A
PAYCHEX INC
PAYX
0.49
0.44
0.00%
Thursday
BTO
DARDEN RESTRNT
DRI
1.08
1.08
0.83%
Thursday
BTO
CONAGRA FOODS
CAG
0.52
0.59
17.24%
Thursday
BTO
MCCORMICK & CO
MKC
0.74
0.75
7.25%
Thursday
BTO
CONSTELLATN BRD
STZ
1.51
1.26
4.39%
Thursday
BTO
LINDSAY CORP
LNN
0.97
1.1
-27.59%
Thursday
BTO
SCHNITZER STEEL
SCHN
0.14
0
3.85%
Thursday
BTO
FRANKLIN COVEY
FC
0.08
0.13
-160.00%
Thursday
AMC
MICRON TECH
MU
-0.1
0.54
44.44%
Thursday
N/A
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Q2 Earnings Season Gets Underway
No one is expected to pay attention to earnings given the unexpected Brexit vote, but the Q2 earnings season has gotten underway, with results from 10 S&P 500 members already out. All of these early reporters, which includes major operators like FedEx (FDX - Free Report) , Oracle (ORCL - Free Report) and Adobe (ADBE - Free Report) , have fiscal quarters ending in May, but get clubbed as part of the June quarter tally. We have another 11 index members with fiscal quarters ending in May on deck to report results this week. All in all, we will have seen Q2 results from almost two dozen S&P 500 members by the time Alcoa (AA - Free Report) comes out with its results on July 11th.
The chart below shows the weekly calendar of earnings releases for the entire Q2 earnings cycle. As you can see, we are about three weeks away from the reporting cycle really ramping up.
Expectations for the Quarter
Total earnings for the 10 index members that have reported results are up +4.1% on +4.2% higher revenues, with 60% beating EPS estimates and equal proportion coming ahead of top-line expectations. Comparison of the Q2 results thus far with prior periods offers a mixed picture. But it’s likely too small a sample to draw any conclusions from in any case.
For Q2 as a whole, total earnings for the S&P 500 are expected to be down -6.1% on -0.7% lower revenues, with growth in negative territory for 9 of the 16 Zacks sectors. As has been the pattern in other recent periods, the Energy sector remains the biggest drag on the aggregate growth picture, with total earnings for the sector expected to be down -78.9% on -27.1% lower revenues. Excluding the Energy sector, earnings for the rest of the index would be down -2.7%.
The table below shows the summary picture for Q2 contrasted with what was actually achieved in the preceding period.
Estimates for Q2 faithfully followed the well-trodden path of previous quarters, as the chart below shows.
As negative as this revisions trend looks, it is nevertheless an improvement over what we had seen in the comparable period(s) in other recent quarters. The improved commodity-price backdrop and the reduced dollar drag are some of the explanations for this development. It will be interesting to see if this trend of decelerated negative revisions will continue this earnings season. But we will have to wait a few more weeks to get a better read on this development after companies start reporting June quarter results and guide towards Q3 estimates. Current estimates for Q3 are showing flat growth from the year-earlier level.
Expectations Beyond Q2
The chart below shows current quarterly earnings growth expectations for the index in 2016 Q2 and the following four quarters contrasted with actual declines in the preceding three quarters. As you can see, growth is expected to be negative in 2016 Q2 and flat in the following quarter.
The only meaningful positive earnings growth this year is expected to come from the last quarter of the year, which is then expected to continue into 2017 when earnings for the S&P 500 index are expected to be up in double-digits. We will see if those estimates will hold up as we reach the last quarter of the year. But given what we have seen over the last few quarters, the odds don’t look that favorable.
Note: Want more articles from this author? Scroll up to the top of this article and click the FOLLOW AUTHOR button to get an email each time a new article is published.
Note: For a complete analysis of 2016 Q2 estimates, please check out weekly Earnings Trends report.
Here is a list of the 32 companies reporting this week, including 11 S&P 500 members.
Company
Ticker
Q0 EST
Year Ago
Last EPS
Surprise
Report Date
Time
SUPERCOM LTD
SPCB
0.03
0.21
0.00%
Monday
BTO
CARNIVAL CORP
CCL
0.39
0.25
25.81%
Tuesday
BTO
CARNIVAL PLC
CUK
N/A
0.25
25.00%
Tuesday
BTO
IHS INC-A
IHS
1.14
1.18
8.82%
Tuesday
BTO
BARNES NOB EDUC
BNED
-0.11
N/A
0.00%
Tuesday
BTO
FACTSET RESH
FDS
1.63
1.42
4.61%
Tuesday
BTO
NIKE INC-B
NKE
0.48
0.49
14.58%
Tuesday
AMC
SCHULMAN(A) INC
SHLM
0.78
0.72
14.81%
Tuesday
AMC
AEROVIRONMENT
AVAV
-0.08
0.32
440.00%
Tuesday
AMC
CALAMP CORP
CAMP
0.17
0.24
0.00%
Tuesday
AMC
NOVAGOLD RSRCS
NG
N/A
-0.03
0.00%
Tuesday
N/A
GENL MILLS
GIS
0.6
0.75
4.84%
Wednesday
BTO
MONSANTO CO-NEW
MON
2.41
2.39
-1.22%
Wednesday
BTO
ACUITY BRANDS
AYI
1.97
1.37
13.33%
Wednesday
BTO
UNIFIRST CORP
UNF
1.37
1.61
-7.20%
Wednesday
BTO
OMNOVA SOLUTION
OMN
0.14
0.11
300.00%
Wednesday
BTO
PIER 1 IMPORTS
PIR
-0.06
0.08
9.52%
Wednesday
AMC
EXFO INC
EXFO
0.05
0.02
50.00%
Wednesday
AMC
INVESTORS RL ES
IRET
0.14
0.16
8.33%
Wednesday
AMC
PROGRESS SOFTWA
PRGS
0.21
0.27
-5.26%
Wednesday
AMC
XPLORE TECH CP
XPLR
0.01
-0.05
-12.50%
Wednesday
AMC
8POINT3 ENERGY
CAFD
-0.02
N/A
307.69%
Wednesday
N/A
WORTHINGTON IND
WOR
0.63
0.52
-4.17%
Wednesday
N/A
PAYCHEX INC
PAYX
0.49
0.44
0.00%
Thursday
BTO
DARDEN RESTRNT
DRI
1.08
1.08
0.83%
Thursday
BTO
CONAGRA FOODS
CAG
0.52
0.59
17.24%
Thursday
BTO
MCCORMICK & CO
MKC
0.74
0.75
7.25%
Thursday
BTO
CONSTELLATN BRD
STZ
1.51
1.26
4.39%
Thursday
BTO
LINDSAY CORP
LNN
0.97
1.1
-27.59%
Thursday
BTO
SCHNITZER STEEL
SCHN
0.14
0
3.85%
Thursday
BTO
FRANKLIN COVEY
FC
0.08
0.13
-160.00%
Thursday
AMC
MICRON TECH
MU
-0.1
0.54
44.44%
Thursday
N/A