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Zacks Earnings Trends Highlights: Dow, JPMorgan, Chevron and Alphabet
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For Immediate Release
Chicago, IL – June 10, 2021 – Zacks Director of Research Sheraz Mian says, “Total Q2 earnings for the S&P 500 index are expected to be up +59.9% from the same period last year on +17.7% higher revenues."
Looking Ahead to Q2 Earnings Season
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 market will be looking for the strong earnings momentum we saw in the last reporting cycle to continue in the June-quarter earnings season as well, whose early reports have started coming out already.
The expectation is that companies will not only beat seemingly elevated Q2 estimates, but also provide guidance that will help raise estimates for the second half of the year.
Total Q2 earnings for the S&P 500 index are expected to be up +59.9% from the same period last year on +17.7% higher revenues, which would follow the +49.0% earnings growth on +8.9% higher revenues in 2021 Q1.
A big part of the strong Q2 earnings growth is easy comparisons to the year-earlier period that represented the bottom of the Covid-19 earnings impact. But Q2 estimates also reflect genuine growth, with total index earnings expected to be up +8.4% from the pre-Covid 2019 Q2 period.
Total 2021 Q2 earnings for 9 of the 16 Zacks sectors are expected to be up from the pre-Covid 2019 Q2 period, including Technology (up +30.2%), Basic Materials (+69.4%), Medical (+21%), Retail (+24.4%), Construction (+50.4%).
Sectors whose 2021 Q2 earnings are expected to remain below the comparable 2019 period include Transportation (down -69.2%), Consumer Discretionary (-51.9%), Autos (-65.5%), and Energy (-15.7%).
Estimates for Q2 and beyond have been steadily going up, with the current +59.9% earnings growth rate up from +50.6% at the end of March and +41.6% at the start of January 2021.
Looking at the calendar-year picture for the S&P 500 index, earnings are projected to climb +34.6% on +10.4% higher revenues in 2021 and increase +11.3% 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 23.1X and index close, as of June 8th, is $181.65, up from $134.91 in 2020. Using the same methodology, the index ‘EPS’ works out to $202.22 for 2022 (P/E of 20.7X). The multiples have been calculated using the index’s total market cap and aggregate bottom-up earnings for each year.
We continue to believe that positive revisions to estimates 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 onto 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 for Q2 and beyond. 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%, +22.7%, +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.
Zacks Top 10 Stocks for 2021
In addition to the stocks discussed above, would you like to know about our 10 best buy-and-hold tickers for the entirety of 2021?
Last year's 2020 Zacks Top 10 Stocks portfolio returned gains as high as +386.8%. Now a brand-new portfolio has been handpicked from over 4,000 companies covered by the Zacks Rank. Don’t miss your chance to get in on these long-term buys.
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.
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.
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Zacks Earnings Trends Highlights: Dow, JPMorgan, Chevron and Alphabet
For Immediate Release
Chicago, IL – June 10, 2021 – Zacks Director of Research Sheraz Mian says, “Total Q2 earnings for the S&P 500 index are expected to be up +59.9% from the same period last year on +17.7% higher revenues."
Looking Ahead to Q2 Earnings Season
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:
We continue to believe that positive revisions to estimates 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 onto 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 for Q2 and beyond. 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%, +22.7%, +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.
Zacks Top 10 Stocks for 2021
In addition to the stocks discussed above, would you like to know about our 10 best buy-and-hold tickers for the entirety of 2021?
Last year's 2020 Zacks Top 10 Stocks portfolio returned gains as high as +386.8%. Now a brand-new portfolio has been handpicked from over 4,000 companies covered by the Zacks Rank. Don’t miss your chance to get in on these long-term buys.
AccessZacks Top 10 Stocks for 2021 today >>
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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.