We use cookies to understand how you use our site and to improve your experience. This includes personalizing content and advertising. To learn more, click here. By continuing to use our site, you accept our use of cookies, revised Privacy Policy and Terms of Service.
You are being directed to ZacksTrade, a division of LBMZ Securities and licensed broker-dealer. ZacksTrade and Zacks.com are separate companies. The web link between the two companies is not a solicitation or offer to invest in a particular security or type of security. ZacksTrade does not endorse or adopt any particular investment strategy, any analyst opinion/rating/report or any approach to evaluating individual securities.
If you wish to go to ZacksTrade, click OK. If you do not, click Cancel.
Zacks Earnings Trends Highlights: Wal-Mart, Amazon, ExxonMobil and Chevron
Read MoreHide Full Article
For Immediate Release
Chicago, IL – Nov 17, 2017 – Zacks Director of Research Sheraz Mian says, “The Retail sector’s Q3 results show that while earnings growth is hard to come by, results have turned out to be better than expected.”
Plenty of Positive Retail Surprises
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 Retail sector’s Q3 results show that while earnings growth is hard to come by, results have turned out to be better than expected, with an above historical average proportion of retailers beating estimates.
• Looking at all the sectors, while Q3 earnings growth is lagging the preceding two quarters’ double-digit growth pace, revenue growth shows steady acceleration. Earnings growth improves notably once the Finance sector’s drag is excluded from the aggregate picture.
• Positive revenue momentum and favorable revisions trend in estimates for the current period are the two standout features of this earning season.
• Total earnings for the 470 S&P 500 members that have reported already are up +6.6% from the same period last year on +6% higher revenues, with 72.3% beating EPS estimates and 66.5% beating revenue estimates.
• Excluding the Finance sector, Q3 earnings growth improves to +10.5% from +6.6%. The Energy sector has the opposite effect, with Q3 earnings growth declining to +4.3% on an ex-Energy basis.
• While Finance sector results have been below average, this earnings season is turning out to be a good one for the Energy, Industrial Products, Technology, Construction, Business Services, and Medical sectors.
• The revisions trend for Q4 estimates continues to be favorable, with earnings estimates holding up a lot better relative to other comparable periods.
• For full-year 2017, total earnings for the S&P 500 index are expected to be up +7.6% on +4.9% higher revenues, which would follow +0.7% earnings growth on +2.1% higher revenues in 2016. Index earnings are expected to be up +11.7% in 2018 and +9.6% in 2019.
• Earnings growth is on track to turn positive in Q3 for the small-cap S&P 600 index, with total earnings for the index expected to be up +5.5% from the same period last year on +5.7% higher revenues. This would follow persistent earnings declines for the small-cap index – S&P 600 earnings growth was negative in 3 of the last 4 quarters.
• Strong growth from the Finance, Technology and Energy sectors are driving the small-cap growth. The Finance sector’s role is particularly notable in the small-cap index, with Q3 earnings growth rising to +6.7% (from +5.5%) on an ex-Finance basis.
The market is applauding Wal-Mart’s (WMT - Free Report) Q3 earnings report for the reassurance these results provide about the company’s ability to effectively compete with Amazon (AMZN - Free Report) in the current shifting retail environment where many of its brick-and-mortar peers have struggled. Amazon has always been growth and market share, never making margins and profitability a priority.
Importantly, Amazon has successfully conditioned market participants to not judge it negatively for this lack of earnings and margins. The challenge for Wal-Mart and other retailers faced with the Amazon challenge is that they will likely have to forego near-term profits as well to effectively compete. The Wal-Mart report shows aspects of this reality – the retail giant’s Q3 report showed plenty of growth attributes, but those additional sales dollars didn’t have the same margins. In other words, the while Wal-Mart’s Q3 top-line increased +4.2% from the same period last year, net income was down -1.1%.
It is this lack of earnings power that will likely be the enduring Amazon effect on the broader retail sector. Retailers will need to forego near-term profits to hold their ground in this new Retail landscape.
What this shows is that total earnings for the Retail sector companies that have reported are up +1.9% on +7.4% higher revenues, with 75.9% beating EPS estimates and 62.1% beating revenue estimates.
As you can see, except for earnings growth, the sector’s Q3 showing is an improvement over what these same retailers reported in other recent periods. The very strong +7.4% revenue growth in Q3 for the sector is thanks in no small measure to the +33.7% higher Q3 revenues for Amazon. Excluding Amazon, the sector’s Q3 revenue growth drops to +4.9% (from +7.4%), but the +4.9% revenue growth pace is still an improvement over the same ex-Amazon group of retailers in other recent periods.
Q3 Scorecard(as of November 16th, 2017)
We now have Q3 results from 470 S&P 500 members that combined account for 96.2% of the index’s total market capitalization. Total earnings for these 470 index members are up +6.6% from the same period last year on +6% higher revenues, with 72.3% beating EPS estimates and 66.5% beating revenue estimates.
What these comparisons show are:
• The earnings growth rate (+6.6%) for these 470 index members is lower than what we saw from the same group of companies in Q2 and is also below the 4-quarter average. The earnings growth comparison improves on an ex-Finance basis.
• The Q3 revenue growth rate (+6%) represents an acceleration from all other periods in the chart.
• The proportion of positive EPS beasts (72.3%) is a shade below what we saw from the same group of companies in the preceding quarter, but broadly in line with the comparable periods in the chart above.
Revenue beats is slightly below the preceding quarter, which itself was an unusually high revenue beat rate relative to historical periods.
While overall Q3 earnings growth represents a deceleration from the double-digit growth pace of the last two quarters, the growth rate is expected to ramp up in the current and coming quarters, with Q4 earnings growth currently expected at +8.7%.
Importantly, estimates for Q4 have held up very nicely since Q3 results started coming out.
This revisions trend is the most notable positive development on the estimate revisions front in recent years. Q4 estimates for 9 of the 16 Zacks sectors have come down since the start of the quarter, with estimates for the remaining 7 sectors going up. The strongest gains have been in the Energy, Industrial Products, Basic Materials and Technology sectors. The positive Energy sector earnings revisions reflect developments in oil prices, which have started showing in EPS estimates for ExxonMobil (XOM - Free Report) , Chevron (CVX - Free Report) and others.
Note: Sheraz Mian manages the Zacks equity research department. He is an acknowledged earnings expert whose commentaries and analyses appear on Zacks.com and in the print and electronic media. His weekly earnings related articles include Earnings Trends and Earnings Preview. He manages the Zacks Top 10 and Focus List portfolios and writes the Weekly Market Analysis article for Zacks Premium subscribers.
If you want an email notification each time Sheraz Mian publishes a new article, pleaseclick here>>>
About Zacks Equity Research
Zacks Equity Research provides the best of quantitative and qualitative analysis to help investors know what stocks to buy and which to sell for the long-term.
Continuous analyst coverage is provided for a universe of 1,150 publicly traded stocks. Our analysts are organized by industry which gives them keen insights to developments that affect company profits and stock performance. Recommendations and target prices are six-month time horizons.
Strong Stocks that Should Be in the News
Many are little publicized and fly under the Wall Street radar. They're virtually unknown to the general public. Yet today's 220 Zacks Rank #1 "Strong Buys" were generated by the stock-picking system that has nearly tripled the market from 1988 through 2015. Its average gain has been a stellar +26% per year. See these high-potential stocks free >>.
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.
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:
Image: Bigstock
Zacks Earnings Trends Highlights: Wal-Mart, Amazon, ExxonMobil and Chevron
For Immediate Release
Chicago, IL – Nov 17, 2017 – Zacks Director of Research Sheraz Mian says, “The Retail sector’s Q3 results show that while earnings growth is hard to come by, results have turned out to be better than expected.”
Plenty of Positive Retail Surprises
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 Retail sector’s Q3 results show that while earnings growth is hard to come by, results have turned out to be better than expected, with an above historical average proportion of retailers beating estimates.
• Looking at all the sectors, while Q3 earnings growth is lagging the preceding two quarters’ double-digit growth pace, revenue growth shows steady acceleration. Earnings growth improves notably once the Finance sector’s drag is excluded from the aggregate picture.
• Positive revenue momentum and favorable revisions trend in estimates for the current period are the two standout features of this earning season.
• Total earnings for the 470 S&P 500 members that have reported already are up +6.6% from the same period last year on +6% higher revenues, with 72.3% beating EPS estimates and 66.5% beating revenue estimates.
• Excluding the Finance sector, Q3 earnings growth improves to +10.5% from +6.6%. The Energy sector has the opposite effect, with Q3 earnings growth declining to +4.3% on an ex-Energy basis.
• While Finance sector results have been below average, this earnings season is turning out to be a good one for the Energy, Industrial Products, Technology, Construction, Business Services, and Medical sectors.
• The revisions trend for Q4 estimates continues to be favorable, with earnings estimates holding up a lot better relative to other comparable periods.
• For full-year 2017, total earnings for the S&P 500 index are expected to be up +7.6% on +4.9% higher revenues, which would follow +0.7% earnings growth on +2.1% higher revenues in 2016. Index earnings are expected to be up +11.7% in 2018 and +9.6% in 2019.
• Earnings growth is on track to turn positive in Q3 for the small-cap S&P 600 index, with total earnings for the index expected to be up +5.5% from the same period last year on +5.7% higher revenues. This would follow persistent earnings declines for the small-cap index – S&P 600 earnings growth was negative in 3 of the last 4 quarters.
• Strong growth from the Finance, Technology and Energy sectors are driving the small-cap growth. The Finance sector’s role is particularly notable in the small-cap index, with Q3 earnings growth rising to +6.7% (from +5.5%) on an ex-Finance basis.
The market is applauding Wal-Mart’s (WMT - Free Report) Q3 earnings report for the reassurance these results provide about the company’s ability to effectively compete with Amazon (AMZN - Free Report) in the current shifting retail environment where many of its brick-and-mortar peers have struggled. Amazon has always been growth and market share, never making margins and profitability a priority.
Importantly, Amazon has successfully conditioned market participants to not judge it negatively for this lack of earnings and margins. The challenge for Wal-Mart and other retailers faced with the Amazon challenge is that they will likely have to forego near-term profits as well to effectively compete. The Wal-Mart report shows aspects of this reality – the retail giant’s Q3 report showed plenty of growth attributes, but those additional sales dollars didn’t have the same margins. In other words, the while Wal-Mart’s Q3 top-line increased +4.2% from the same period last year, net income was down -1.1%.
It is this lack of earnings power that will likely be the enduring Amazon effect on the broader retail sector. Retailers will need to forego near-term profits to hold their ground in this new Retail landscape.
What this shows is that total earnings for the Retail sector companies that have reported are up +1.9% on +7.4% higher revenues, with 75.9% beating EPS estimates and 62.1% beating revenue estimates.
As you can see, except for earnings growth, the sector’s Q3 showing is an improvement over what these same retailers reported in other recent periods. The very strong +7.4% revenue growth in Q3 for the sector is thanks in no small measure to the +33.7% higher Q3 revenues for Amazon. Excluding Amazon, the sector’s Q3 revenue growth drops to +4.9% (from +7.4%), but the +4.9% revenue growth pace is still an improvement over the same ex-Amazon group of retailers in other recent periods.
Q3 Scorecard(as of November 16th, 2017)
We now have Q3 results from 470 S&P 500 members that combined account for 96.2% of the index’s total market capitalization. Total earnings for these 470 index members are up +6.6% from the same period last year on +6% higher revenues, with 72.3% beating EPS estimates and 66.5% beating revenue estimates.
What these comparisons show are:
• The earnings growth rate (+6.6%) for these 470 index members is lower than what we saw from the same group of companies in Q2 and is also below the 4-quarter average. The earnings growth comparison improves on an ex-Finance basis.
• The Q3 revenue growth rate (+6%) represents an acceleration from all other periods in the chart.
• The proportion of positive EPS beasts (72.3%) is a shade below what we saw from the same group of companies in the preceding quarter, but broadly in line with the comparable periods in the chart above.
Revenue beats is slightly below the preceding quarter, which itself was an unusually high revenue beat rate relative to historical periods.
While overall Q3 earnings growth represents a deceleration from the double-digit growth pace of the last two quarters, the growth rate is expected to ramp up in the current and coming quarters, with Q4 earnings growth currently expected at +8.7%.
Importantly, estimates for Q4 have held up very nicely since Q3 results started coming out.
This revisions trend is the most notable positive development on the estimate revisions front in recent years. Q4 estimates for 9 of the 16 Zacks sectors have come down since the start of the quarter, with estimates for the remaining 7 sectors going up. The strongest gains have been in the Energy, Industrial Products, Basic Materials and Technology sectors. The positive Energy sector earnings revisions reflect developments in oil prices, which have started showing in EPS estimates for ExxonMobil (XOM - Free Report) , Chevron (CVX - Free Report) and others.
Note: Sheraz Mian manages the Zacks equity research department. He is an acknowledged earnings expert whose commentaries and analyses appear on Zacks.com and in the print and electronic media. His weekly earnings related articles include Earnings Trends and Earnings Preview. He manages the Zacks Top 10 and Focus List portfolios and writes the Weekly Market Analysis article for Zacks Premium subscribers.
If you want an email notification each time Sheraz Mian publishes a new article, please click here>>>
About Zacks Equity Research
Zacks Equity Research provides the best of quantitative and qualitative analysis to help investors know what stocks to buy and which to sell for the long-term.
Continuous analyst coverage is provided for a universe of 1,150 publicly traded stocks. Our analysts are organized by industry which gives them keen insights to developments that affect company profits and stock performance. Recommendations and target prices are six-month time horizons.
Strong Stocks that Should Be in the News
Many are little publicized and fly under the Wall Street radar. They're virtually unknown to the general public. Yet today's 220 Zacks Rank #1 "Strong Buys" were generated by the stock-picking system that has nearly tripled the market from 1988 through 2015. Its average gain has been a stellar +26% per year. See these high-potential stocks free >>.
Follow us on Twitter: https://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/
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.