Thursday, July 20, 2023

The Zacks Research Daily presents the best research output of our analyst team. In today's Research Daily, we have provided the real-time scorecard on the ongoing Q2 earnings season in addition to featuring updated research reports on 16 major stocks, including The TJX Companies, Inc. (TJX), Simon Property Group, Inc. (SPG) and MSCI Inc. (MSCI). 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 (As of July 20th, 2023)

Including all of this morning's releases, we now have Q2 results from 77 S&P 500 members or 15.4% of the index's total membership. Total earnings for these 77 index members are up +3.6% from the same period last year on +8.4% higher revenues, with 77.9% beating EPS estimates and 63.6% beating revenue estimates.

The +3.6% year-over-year earnings growth is higher than any other period since the last quarter of 2021 for this group of 77 index members. The +8.4% revenue growth compares to +9.3% in 2023 Q1, +7.8% in 2022 Q4, +9.8% each 2022 Q3 and Q2 and +10.2% in 2022 Q1.

The 77.9% EPS beats percentage is the same as was achieved by this group of companies in the preceding period, but higher than the last three quarters of 2022 and about in-line with the 20-quarter average 77.7%.

This would typically not be worth highlighting, but we think it can be interpreted to mean underlying earnings strength since Q2 estimates hadn't fallen as much as had been the case with other recent quarters.

Unlike the EPS beats percentage, the Q2 revenue beats percentage is tracking below what we have become to used to seeing in other recent periods for this group of 77 index members.

Looking at Q2 as a whole, combining the actuals for this group of 77 index members with estimates for the still-to-come companies, total S&P 500 earnings are expected to decline -8.9% from the same period last year on -0.5% lower revenues.

Featured Analyst Reports

TJX Companies shares have outperformed the Zacks Retail - Discount Stores industry over the past year (+36.6% vs. +4.3%). The company’s off-price business model, strategic store locations, impressive brands and fashion products and supply-chain management have been working well.

The TJX Companies is benefiting from its solid store and e-commerce growth efforts. The company’s Marmaxx segment is doing particularly well, wherein comp store sales increased in the first quarter of fiscal 2024, backed by improved customer traffic. The company expects the pretax profit margin to increase in fiscal 2024 and also anticipates overall comp store sales growth.

However, the HomeGoods (U.S.) division has been seeing soft sales. Also, TJX has been grappling with increased wage and supply-chain costs. Management expects these costs to be deterrents in fiscal 2024.


Shares of Simon Property have outperformed the Zacks REIT and Equity Trust - Retail industry over the past year (+26.3% vs. +13.1%). The company is well-poised to benefit from its portfolio of premium assets located in some of the key markets globally. Healthy retail demand has aided leasing activity and occupancy levels.

In June, Simon partnered with Razer to open five RazerStore shops at its properties as the brand continues its experiential retail expansion in 2023. This retail REIT’s efforts to support omnichannel retailing and focus on mixed-use developments are encouraging. Its strategic buyouts, redevelopment efforts and solid liquidity position bode well.

However, higher e-commerce adoption and limited consumers’ willingness to spend amid persistent macroeconomic uncertainty and high interest rates are concerning. While total revenues are expected to improve 2.1% year over year for 2023, funds from operations (FFO) are projected to decline slightly.

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

Shares of MSCI have outperformed the Zacks Business - Software Services industry over the past year (+14.7% vs. +4.9%). The company’s prospects are benefiting from solid growth in recurring subscriptions. It is gaining strong demand for custom and factor index modules, recurring revenue business models, and the growing adoption of its ESG and Climate solutions in the investment process.

MSCI’s expanding portfolio of real asset solutions is noteworthy. Acquisitions have enhanced MSCI’s ability to provide climate-risk assessment and assist investors with climate-risk disclosure requirements. MSCI’s new portfolio foot printing tool has extended climate analysis to municipal bonds and securitized products.

Moreover, strong traction from client segments like wealth management, banks and hedge funds is a positive. However, a leveraged balance sheet are major concerns for MSCI.

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

Other noteworthy reports we are featuring today include BCE Inc. (BCE), MPLX LP (MPLX) and Sun Life Financial Inc. (SLF).

Director of Research

Sheraz Mian

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>>>