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Zacks Earnings Trends Highlights: Microsoft, Apple, Google, Amazon and Exxon Mobil
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For Immediate Release
Chicago, IL – July 29, 2021 – Zacks Director of Research Sheraz Mian says, “For the 195 S&P 500 members that have reported Q2 results already, total earnings are up +105.0% on +22.3% higher revenues, with 90.8% beating EPS estimates and 86.2% topping revenue estimates."
The Tech Sector's Enormous Earnings Power
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 Q2 earnings season is one of all-around strength, with aggregate total quarterly earnings on track to reach a new all-time record and impressive momentum on the revenue side.
For the 195 S&P 500 members that have reported Q2 results already, total earnings are up +105.0% on +22.3% higher revenues, with 90.8% beating EPS estimates and 86.2% topping revenue estimates.
While the outsized earnings growth pace is mostly due to easy comparisons, primarily in the Finance sector, the performance on the revenue front (growth rate as well as beats percentage) is tracking above what we have been seeing in other recent periods.
For the Tech sector, we now have Q2 results from 65.8% of the sector's market capitalization in the S&P 500 index. Total earnings for these Tech companies are up +63.9% from the same period last year on +24.7% higher revenues, with 96.3% beating EPS estimates and 100% beating revenue estimates.
For the Finance sector, we now have Q2 results from 62.0% of the sector's market capitalization in the S&P 500 index. Total earnings for these Finance companies are up +221.9% from the same period last year on +7.0% higher revenues, with 97.9% beating EPS estimates and 78.7% beating revenue estimates.
Excluding the unusually high Finance sector earnings growth, total Q2 earnings growth for the remainder of the index members that have reported results would be up +78.5% on +26.0% higher revenues.
Looking at Q2 as a whole, combining the actual results for the 195 index members that have reported with estimates for the still-to-come companies, total S&P 500 earnings are expected to be up +83.9% from the same period last year on +21.3% higher revenues, with the growth rate steadily going up as companies report better-than-expected results.
Looking at the calendar-year picture for the S&P 500 index, earnings are projected to climb +39.2% on +11.6% higher revenues in 2021 and increase +9.9% on +6.5% higher revenues in 2022. This would follow a decline of -13.1% in 2020.
The implied 'EPS' for the S&P 500 index, calculated using the current 2021 P/E of 23.3X and index close, as of July 27th, is $188.64, up from $135.51 in 2020. Using the same methodology, the index 'EPS' works out to $207.23 for 2022 (P/E of 21.2X). The multiples have been calculated using the index's total market cap and aggregate bottom-up earnings for each year.
The market didn't seem to be overly impressed with the Microsoft (MSFT - Free Report) earnings report, when it not only beat top- and bottom-line estimates, but came out with earnings and revenue growth of +46.9% and +21.3%, respectively.
To put the year-over-year growth rates in context, please note that while the year-earlier period (2020 Q2) may have depressed overall corporate profitability, Microsoft's earnings and revenues were actually up from the comparable 2019 period. Just give you a sense of the magnitude of Microsoft's earnings power, the company earned $14.3 billion in earnings on $44.1 billion in revenues in 2021 Q2.
The market seems to have shrugged off Apple's (AAPL - Free Report) report as well, which earned $21.7 billion in earnings on $81.4 billion in revenues in the June quarter. This not only handily beat consensus estimates, but were up +93.2% and +36.4% from the year-earlier levels, respectively.
The market is happier with Alphabet's (GOOGL - Free Report) results, which also beat EPS and revenue estimates and whose Q2 earnings and revenues represented year-over-year growth rates of +166.2% and +61.2%, respectively. The actual Q2 dollar amounts for Alphabet are $18.5 billion earnings on $50.9 billion in revenues.
We haven't seen results from Amazon (AMZN - Free Report) as we write this, but we all know those companies are as profitable as Microsoft, Alphabet and Apple.
Back in the day, we used to have this magnitude of earnings only from the likes of Exxon (XOM - Free Report) when it was operating on all cylinders and oil prices were above $100. Exxon is still a very profitable company, but it is expected to earn 'only' $4.3 billion when it reports its June-quarter results at the end of the week.
It is no surprise then that each of these companies enjoy market values exceeding a trillion dollars (Apple & Microsoft are over $2 trillion), while Exxon is less than $250 billion. No doubt, these Tech companies have changed the world and dominate the market.
The big 5 Tech companies – Apple, Microsoft, Alphabet, Amazon and Facebook – are, combined, expected to earn +79.4% more in Q2 on +35.7% higher revenues relative to the same period last year.
If one were to look for 'negatives' in the above picture, it would probably be the coming period of deceleration in the group trend. But given the very positive revisions trend currently in place, I would hazard that estimates for the coming periods will most likely get revised higher.
These are growth rates typically associated with start-ups and much younger companies, not seasoned operators like Microsoft and Co.
The Earnings Big Picture
We remain positive in our earnings outlook, as we see the full-year 2021 growth picture steadily improving, with the revisions trend accelerating in the back half of the year.
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: Microsoft, Apple, Google, Amazon and Exxon Mobil
For Immediate Release
Chicago, IL – July 29, 2021 – Zacks Director of Research Sheraz Mian says, “For the 195 S&P 500 members that have reported Q2 results already, total earnings are up +105.0% on +22.3% higher revenues, with 90.8% beating EPS estimates and 86.2% topping revenue estimates."
The Tech Sector's Enormous Earnings Power
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 didn't seem to be overly impressed with the Microsoft (MSFT - Free Report) earnings report, when it not only beat top- and bottom-line estimates, but came out with earnings and revenue growth of +46.9% and +21.3%, respectively.
To put the year-over-year growth rates in context, please note that while the year-earlier period (2020 Q2) may have depressed overall corporate profitability, Microsoft's earnings and revenues were actually up from the comparable 2019 period. Just give you a sense of the magnitude of Microsoft's earnings power, the company earned $14.3 billion in earnings on $44.1 billion in revenues in 2021 Q2.
The market seems to have shrugged off Apple's (AAPL - Free Report) report as well, which earned $21.7 billion in earnings on $81.4 billion in revenues in the June quarter. This not only handily beat consensus estimates, but were up +93.2% and +36.4% from the year-earlier levels, respectively.
The market is happier with Alphabet's (GOOGL - Free Report) results, which also beat EPS and revenue estimates and whose Q2 earnings and revenues represented year-over-year growth rates of +166.2% and +61.2%, respectively. The actual Q2 dollar amounts for Alphabet are $18.5 billion earnings on $50.9 billion in revenues.
We haven't seen results from Amazon (AMZN - Free Report) as we write this, but we all know those companies are as profitable as Microsoft, Alphabet and Apple.
Back in the day, we used to have this magnitude of earnings only from the likes of Exxon (XOM - Free Report) when it was operating on all cylinders and oil prices were above $100. Exxon is still a very profitable company, but it is expected to earn 'only' $4.3 billion when it reports its June-quarter results at the end of the week.
It is no surprise then that each of these companies enjoy market values exceeding a trillion dollars (Apple & Microsoft are over $2 trillion), while Exxon is less than $250 billion. No doubt, these Tech companies have changed the world and dominate the market.
The big 5 Tech companies – Apple, Microsoft, Alphabet, Amazon and Facebook – are, combined, expected to earn +79.4% more in Q2 on +35.7% higher revenues relative to the same period last year.
If one were to look for 'negatives' in the above picture, it would probably be the coming period of deceleration in the group trend. But given the very positive revisions trend currently in place, I would hazard that estimates for the coming periods will most likely get revised higher.
These are growth rates typically associated with start-ups and much younger companies, not seasoned operators like Microsoft and Co.
The Earnings Big Picture
We remain positive in our earnings outlook, as we see the full-year 2021 growth picture steadily improving, with the revisions trend accelerating in the back half of the year.
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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.