Back to top

Image: Bigstock

Zacks Earnings Trends Highlights: Dow, JPMorgan, Chevron and Google

Read MoreHide Full Article

For Immediate Release

Chicago, IL – May 13, 2021 – Zacks Director of Research Sheraz Mian says, “Total earnings for the 457 S&P 500 companies that have reported Q1 results are up +46.5% on +9.7% higher revenues."

Earnings Estimates Keep Going Up

Note: The following is an excerpt from this week's Earnings Trends report. You can access the full report that contains detailed historical actual and estimates for the current and following periods, please click here>>>

Here are the key points:

  • The picture emerging from the Q1 earnings season is one of all-around strength and momentum, even though big slices of the economy are still dealing with the pandemic's impacts.
     
  • Earnings and revenue growth for the 91% of S&P 500 members that have reported Q1 results (457 index members) are tracking above this group's recent trend, including the pre-pandemic period. But even more importantly, the tone and substance of guidance is favorable, which is helping sustain the favorable revisions trend that has been in place since last Summer.
     
  • Total earnings for the 457 S&P 500 companies that have reported Q1 results are up +46.5% on +9.7% higher revenues, with 86.0% beating EPS estimates and 76.8% beating revenue estimates. The outsized earnings growth is largely due to very strong numbers from the Finance sector.              
     
  • For the 100% of the Finance sector's market capitalization that have reported Q1 results, total earnings and revenues are up +98.3% and +7.2%, respectively, with 92.4% beating EPS estimates and 73.9% beating top-line estimates. A combination of easy comparisons and unusually strong capital markets business drove the group's strong results.
     
  • Excluding the Finance sector's strong growth, Q1 earnings growth for the remainder of the companies that have reported results would be up +34.2% (vs. +46.5%) on +10.2% (vs. +9.7%) higher revenues, which is still the strongest growth for this cohort of companies in recent quarters.
     
  • For the Technology sector, we now have Q1 results from 86.9% of the sector's total market capitalization in the S&P 500 index. Total earnings for these Tech companies are up +56.0% from the same period last year on +24.8% higher revenues, with 93.4% of the companies beating EPS estimates and 95.1% beating revenue estimates.
     
  • Looking at 2021 Q1 as a whole, combining the results that have come out with estimates for the still-to-come companies (the 'blended' view), total S&P 500 earnings are now expected to be up +46.4% from the same period last year on +9.5% higher revenues; meaning the aggregate growth picture will not change much as the still-to-report companies report results.
     
  • The 'blended' Q1 total earnings are on track to reach a new all-time quarterly record, thanks to impressive results from Finance and Technology, the two largest earnings contributors to the S&P 500 index.
     
  • Estimates for the current and coming quarters are steadily going up, a trend that has been in place since last Summer. We expect this favorable revisions trend to accelerate in the coming months as we start looking past the pandemic.
     
  • For the June quarter, S&P 500 earnings are currently expected to be up +58.6% on +16.8% higher revenues, as the year-earlier period represented the bottom of the Covid hit to earnings. The +58.6% earnings growth rate is up from +50.6% at the end of March and +41.6% at the start of January 2021.
     
  • Sectors with positive earnings growth in Q1 include: Finance (+98.3% earnings growth), Technology (+51.9%), Autos (+608.9%), Retail (+67.5%), Medical (+24.9%), Basic Materials (+80.4%), Construction (+58.0%), Industrial Products (+45.5%), Utilities (+3.8%), and Consumer Staples (+12.3%).
     
  • Currently, the only two sectors expected to see their earnings decline are Transportation (-156.3% earnings decline) and Consumer Discretionary (-14.2%).
     
  • Looking at the calendar-year picture for the S&P 500 index, earnings are projected to climb +32.7% on +9.7% higher revenues in 2021 and increase +11.9% on +6.4% higher revenues in 2022. This would follow a decline of -13.1% in 2020 on -1.7% lower revenues.
     
  • The implied 'EPS' for the S&P 500 index, calculated using the current 2021 P/E of 23.0X and index close, as of May 11th, is $180.45, up from $135.97 in 2020. Using the same methodology, the index 'EPS' works out to $201.87 for 2022 (P/E of 20.6X). The multiples have been calculated using the index's total market cap and aggregate bottom-up earnings for each year.
     
  • For the small-cap S&P 600 index, we now have Q1 results from 531 index members or 88.4% of the index's membership. Total earnings for these 531 index members are up +206.9% on +8.3% higher revenues, with 74.0% beating EPS estimates and 75.0% beating revenue estimates. 

Positive revisions to estimates for 2021 Q2 and beyond is the part of the earnings story that stock market investors should find the most reassuring, as this provides the most convincing fundamental rationale for stocks to hold and build on their values. 

In most 'normal' periods, we will be seeing negative estimate revisions; meaning earnings estimates would be going down. We are seeing the opposite, with estimates going up.

Please note that this is a replay of what we experienced in Q1 as well, though the pace of positive revisions is stronger. In fact, this trend of positive revisions started back last Summer as the U.S. economy started coming out of the pandemic-driven lockdowns. While the direction of revisions is the same, the pace and magnitude of positive revisions has only accelerated, a trend that we expect will gain further pace in the second half of the year.

We are seeing the same trend at play in estimates for full-year 2021.

The most impressive aspect of this favorable revisions trend is that estimates are going up across the board for most sectors. Of the 16 Zacks sectors, estimates have gone up for 14 sectors since the start of the year, with the Energy, Basic Materials, Construction, Finance and Technology sectors enjoying the largest proportional increases in estimates.

You can see this phenomenon in estimates for bellwether operators in a variety of sectors. Check out, for example, full-year 2021 EPS estimates for Dow (DOW - Free Report) , JPMorgan (JPM - Free Report) , Chevron (CVX - Free Report) and Alphabet (GOOGL - Free Report) and you will find that EPS estimates have gone up +80.2%, +24.5%, +61.4% and +27.3% over the past three months, respectively.

The Earnings Big Picture

We remain positive in our earnings outlook, as we see the full-year 2021 growth picture steadily improving, with the aforementioned revisions trend accelerating in the back half of the year.

5 Stocks Set to Double

Each was hand-picked by a Zacks expert as the #1 favorite stock to gain +100% or more in 2020. Each comes from a different sector and has unique qualities and catalysts that could fuel exceptional growth.

Most of the stocks in this report are flying under Wall Street radar, which provides a great opportunity to get in on the ground floor.

Today, See These 5 Potential Home Runs >>

Follow us on Twitter:  https://www.twitter.com/zacksresearch

Join us on Facebook:  https://www.facebook.com/home.php#/pages/Zacks-Investment-Research/57553657748?ref=ts

Zacks Investment Research is under common control with affiliated entities (including a broker-dealer and an investment adviser), which may engage in transactions involving the foregoing securities for the clients of such affiliates.

Media Contact

Zacks Investment Research

800-767-3771 ext. 9339

support@zacks.com

https://www.zacks.com

Zacks.com provides investment resources and informs you of these resources, which you may choose to use in making your own investment decisions. Zacks is providing information on this resource to you subject to the Zacks "Terms and Conditions of Service" disclaimer. www.zacks.com/disclaimer.

Past performance is no guarantee of future results. Inherent in any investment is the potential for loss.This material is being provided for informational purposes only and nothing herein constitutes investment, legal, accounting or tax advice, or a recommendation to buy, sell or hold a security. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. It should not be assumed that any investments in securities, companies, sectors or markets identified and described were or will be profitable. All information is current as of the date of herein and is subject to change without notice. Any views or opinions expressed may not reflect those of the firm as a whole. Zacks Investment Research does not engage in investment banking, market making or asset management activities of any securities. These returns are from hypothetical portfolios consisting of stocks with Zacks Rank = 1 that were rebalanced monthly with zero transaction costs. These are not the returns of actual portfolios of stocks. The S&P 500 is an unmanaged index. Visit https://www.zacks.com/performance for information about the performance numbers displayed in this press release.


See More Zacks Research for These Tickers


Normally $25 each - click below to receive one report FREE:


JPMorgan Chase & Co. (JPM) - free report >>

Chevron Corporation (CVX) - free report >>

Dow Inc. (DOW) - free report >>

Alphabet Inc. (GOOGL) - free report >>

Published in