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Zacks Earnings Trends Highlights: JPMorgan, Oracle, Costco and FedEx
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For Immediate Release
Chicago, IL – September 8, 2022 – Zacks Director of Research Sheraz Mian says, "Excluding the Energy sector, Q3 earnings are expected to be down -5.3% at present, a significant decline from +2.1% at the beginning of July."
Previewing Q3 Earnings Season as Estimates Keep Falling
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:
· Estimates for the last two quarters of this year and full-year 2023 are coming down, even though positive revisions to the Energy sector continue to partly offset those estimate cuts elsewhere.
· The +1.4% earnings growth expected for the S&P 500 index in 2022 Q3 is down from +7.2% at the start of the period. Excluding the Energy sector, Q3 earnings are expected to be down -5.3% at present, a significant decline from +2.1% at the beginning of July.
· Q3 estimates have been cut for 14 of the 16 Zacks sectors since the quarter got underway, with the biggest declines at the Consumer Discretionary, Consumer Staples, Technology, Retail and Conglomerates sectors.
· On the positive side, Q3 estimates have gone up the most for the Energy sector, but the revisions trend has been positive for the Auto sector as well.
The Q3 earnings season will really get going in mid-October when JPMorgan (JPM - Free Report) and the other big banks come out with their results. But the early reports will start trickling in soon enough, with next week's Oracle (ORCL - Free Report) report for the company's fiscal period ending in August getting counted as one such early Q3 report.
We will have Costco (COST - Free Report) , FedEx (FDX - Free Report) and others come out with similar early Q3 results before we see JPMorgan's quarterly numbers.
The preceding earnings season turned out to be better than expected; not great, but not bad either. Given the unprecedented Fed tightening and the resulting macro uncertainties, market participants feared the corporate profitability picture would start deteriorating.
We saw some companies miss estimates and guide lower. But for the most part, the market's earnings fears didn't bear out. That said, the strong U.S. dollar has joined the pre-existing headwinds of logistical challenges and inflationary pressures in weighing on corporate profitability. We will have to wait and see whether the Q3 reporting cycle will bring in the long-feared earnings downturn.
Estimates have started coming down, with the overall revisions trend turning negative even after accounting for the persistent favorable revisions trend enjoyed by the Energy sector.
If we look at the evolution of Q3 earnings growth expectations on an ex-Energy basis, the expected growth rate has dropped from +2.1% on July 6th to -5.3% today.
As you can see above, aggregate S&P 500 earnings outside of the Energy sector have declined -6% since mid-April, with double-digit percentage declines in Retail (down -14.7%), Construction (-10.7%), and Tech (-10.8%). Estimates have also been coming down in the Consumer Discretionary, Industrial Products, Medical and Finance sectors as well.
The Overall Earnings Picture
Beyond Q2, the growth picture is expected to modestly improve, with the growth momentum expected to continue.
Please note that a big part of this year's growth is thanks to the strong momentum in the Energy sector whose earnings are on track to grow +138.2% this year. Excluding this extraordinary Energy sector contribution, earnings growth for the rest of the index would be up only +0.2%.
There is a rising degree of uncertainty about the outlook, reflecting a lack of macroeconomic visibility in a backdrop of Fed monetary policy tightening. The evolving earnings revisions trend will reflect this macro backdrop.
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/performancefor information about the performance numbers displayed in this press release.
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Zacks Earnings Trends Highlights: JPMorgan, Oracle, Costco and FedEx
For Immediate Release
Chicago, IL – September 8, 2022 – Zacks Director of Research Sheraz Mian says, "Excluding the Energy sector, Q3 earnings are expected to be down -5.3% at present, a significant decline from +2.1% at the beginning of July."
Previewing Q3 Earnings Season as Estimates Keep Falling
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:
· Estimates for the last two quarters of this year and full-year 2023 are coming down, even though positive revisions to the Energy sector continue to partly offset those estimate cuts elsewhere.
· The +1.4% earnings growth expected for the S&P 500 index in 2022 Q3 is down from +7.2% at the start of the period. Excluding the Energy sector, Q3 earnings are expected to be down -5.3% at present, a significant decline from +2.1% at the beginning of July.
· Q3 estimates have been cut for 14 of the 16 Zacks sectors since the quarter got underway, with the biggest declines at the Consumer Discretionary, Consumer Staples, Technology, Retail and Conglomerates sectors.
· On the positive side, Q3 estimates have gone up the most for the Energy sector, but the revisions trend has been positive for the Auto sector as well.
The Q3 earnings season will really get going in mid-October when JPMorgan (JPM - Free Report) and the other big banks come out with their results. But the early reports will start trickling in soon enough, with next week's Oracle (ORCL - Free Report) report for the company's fiscal period ending in August getting counted as one such early Q3 report.
We will have Costco (COST - Free Report) , FedEx (FDX - Free Report) and others come out with similar early Q3 results before we see JPMorgan's quarterly numbers.
The preceding earnings season turned out to be better than expected; not great, but not bad either. Given the unprecedented Fed tightening and the resulting macro uncertainties, market participants feared the corporate profitability picture would start deteriorating.
We saw some companies miss estimates and guide lower. But for the most part, the market's earnings fears didn't bear out. That said, the strong U.S. dollar has joined the pre-existing headwinds of logistical challenges and inflationary pressures in weighing on corporate profitability. We will have to wait and see whether the Q3 reporting cycle will bring in the long-feared earnings downturn.
Estimates have started coming down, with the overall revisions trend turning negative even after accounting for the persistent favorable revisions trend enjoyed by the Energy sector.
If we look at the evolution of Q3 earnings growth expectations on an ex-Energy basis, the expected growth rate has dropped from +2.1% on July 6th to -5.3% today.
As you can see above, aggregate S&P 500 earnings outside of the Energy sector have declined -6% since mid-April, with double-digit percentage declines in Retail (down -14.7%), Construction (-10.7%), and Tech (-10.8%). Estimates have also been coming down in the Consumer Discretionary, Industrial Products, Medical and Finance sectors as well.
The Overall Earnings Picture
Beyond Q2, the growth picture is expected to modestly improve, with the growth momentum expected to continue.
Please note that a big part of this year's growth is thanks to the strong momentum in the Energy sector whose earnings are on track to grow +138.2% this year. Excluding this extraordinary Energy sector contribution, earnings growth for the rest of the index would be up only +0.2%.
There is a rising degree of uncertainty about the outlook, reflecting a lack of macroeconomic visibility in a backdrop of Fed monetary policy tightening. The evolving earnings revisions trend will reflect this macro backdrop.
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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/performancefor information about the performance numbers displayed in this press release.