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Big Morning of Q3 Earnings Beats

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Tuesday, October 24, 2017

We’ve already got a busy day of Q3 earnings reports to sift through, and market participants should take heart that, by and large, most major companies reporting before the opening bell have outperformed expectations — in some cases by a wide margin. After today’s market close, we expect another wave of Q3 reports from companies such as AT&T (T - Free Report) and Chipotle (CMG - Free Report) . But let’s dig in with the breakfast portion of earnings results:

Zacks Rank #2 (Buy)-rated Caterpillar (CAT - Free Report) is up 7% in pre-market trading following its blowout results in Q3 earnings and revenues. Its bottom line of $1.77 per share amounts to a 45% positive earnings surprise over the $1.22 in the Zacks consensus, and miles ahead of the 85 cents per share in CAT’s fiscal Q3 2016. Sales reached $11.4 billion, far surpassing the $10.6 billion expected and $9.2 billion a year ago. Construction growth in China and on-shore oil & gas businesses in North America drove quarterly growth most notably.

Remarkably, CAT’s 45% earnings surprise is roughly in-line with the heavy machinery manufacturer’s trailing four quarters of earnings beats, bolstered by a Q1 2017 surprise of more than 100%. Caterpillar has also upped full-year guidance to around $6.25 per share; $5.26 was the previous Zacks consensus estimate. CAT also carries a Zacks Style Score of A.

General Motors (GM - Free Report) also outperformed expectations this morning: its $1.32 per share easily outperformed the $1.07 expected — though results are still down more than 20% year over year — on quarterly sales of $33.62 billion — well beyond the $31.6 billion we had been looking for. GM looks to bring two electric cars to market in the next year and a half. It also has posted a positive earnings surprise for at least the past five straight quarters, with a trailing 4-quarter average of 14.7%. Shares of GM are up 3% at this point in today’s pre-market.

Defense and aerospace major United Technologies topped expectations on earnings, revenues and guidance. This is the third straight earnings beat for the parent company of Pratt & Whitney, Otis Elevators, and many other companies: $1.73 per share beat the Zacks consensus by 5 cents, whereas the top-line actual of $15.1 billion outperformed the $14.9 billion we had been looking for. Full-year guidance was also raised from $6.45 - 6.60 per share to $6.58 - 6.63.

Industrial supply giant 3M (MMM - Free Report) also beat top and bottom-line estimates prior to Tuesday’s open, with earnings of $2.33 per share and revenues of $8.17 billion surprising the $2.21 per share and $7.91 billion expected. Full-year guidance was also ratcheted up notably, from the previous Zacks consensus estimate of $8.95 per share to $9.00 - 9.15 as of its Q3 report. Shares of 3M are up 1.6% thus far in today’s pre-market.

McDonald’s (MCD - Free Report) posted a mixed Q3 earnings report this morning, beating earnings estimates by a penny to $1.76 per share on $5.76 billion, which was a bit shy of the $5.80 billion expected. The Zacks ESP called this one-cent beat exactly, even as the negative impact of Hurricanes Harvey and Irma hit same-store sales in Texas and Florida from Q3 2016. In fact, U.S. comps were up 4.1% in the quarter, and International was up 6%. Shares are currently up 1.3% in early trading.

Other companies this morning to have surpassed expectations and also raised full-year guidance are Stanley Black & Decker (SWK - Free Report) , Eli Lilly (LLY - Free Report) and Polaris (PII - Free Report) . Please check out these companies’ quote pages by clicking on their ticker links, and there you will find in-depth reports on the latest earnings news.

Mark Vickery
Senior Editor

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