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Zacks Earnings Trends Highlights: ExxonMobil and Chevron
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For Immediate Release
Chicago, IL – December 1, 2017 – Zacks Director of Research Sheraz Mian says, “We will start getting the earnings Q4 results in about two weeks’ time, though the reporting season will really get going only in the second week of the New Year.”
Earnings Growth to Accelerate for 2018
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 will start getting the earnings Q4 results in about two weeks’ time, though the reporting season will really get going only in the second week of the New Year.
• Total Q4 earnings are expected to be up +8.6% from the same period last year on +6.6% higher revenues. The revisions trend for Q4 estimates has been very favorable, with earnings estimates holding up a lot better relative to other comparable periods.
• The Q3 is effectively over, with results from 494 S&P 500 members already out. Total earnings for the 494 S&P 500 members that have reported already are up +6.5% from the same period last year on +5.8% higher revenues, with 72.5% beating EPS estimates and 67.2% beating revenue estimates.
• While Q3 earnings growth lagged the preceding two quarters’ double-digit growth pace, revenue growth showed steady acceleration. Q3 earnings growth starts looking comparable to the preceding two quarters once the Finance sector’s drag is excluded from the results.
• Excluding the Finance sector, Q3 earnings growth improves to +10.3% from +6.3%. 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 turned out to be a good one for the Energy, Industrial Products, Technology, Construction, Business Services, and Medical sectors.
• For full-year 2017, total earnings for the S&P 500 index are expected to be up +7.6% on +5% higher revenues, which would follow +0.7% earnings growth on +2.2% higher revenues in 2016. Index earnings are expected to be up +11.6% in 2018 and +9.5% in 2019.
• Earnings growth turned positive in Q3 for the small-cap S&P 600 index, with total earnings for the index expected to be up +5.2% from the same period last year on +5.8% higher revenues. This follows 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, Autos, Construction, 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 falling to +5.7% (from +5.8%) on an ex-Finance basis.
Our earnings discussion is typically focused on quarterly results. But since we are currently in an in-between period when the Q3 earnings season has ended while the Q4 earnings season is still a few weeks away, a step back from the quarterly numbers and a look at the annual view makes sense.
Earnings growth resumed in 2017, after flat-lining in the preceding two years, with total S&P 500 earnings are on track to increase +7.6% this year on +5% higher revenues. But the growth pace is expected to accelerate in 2018 and 2019, with total earnings for the index expected to be increase +11.6% and +9.5%, respectively.
A big drag on earnings growth in the preceding two years was the sharp decline in oil prices and the impact that it had on the aggregate earnings picture. The Energy sector brought in $108.1 billion in aggregate earnings in 2014 and accounted for 10.1% of all S&P 500 earnings that year. The sector’s earnings dropped to $40 billion in 2015, accounting for 3.7% of all index earnings in 2015. In 2016, the sector earned only $9.2 billion, with its contribution to overall index earnings dropping below the 1% level. The picture has improved now, with the sector’s 2017 earnings on track to reach $39 billion, barely reaching the 2015 level.
The improvement we are seeing in the Energy sector’s earnings picture this year is a big reason for the aggregate growth resumption, with the 2017 earnings growth for the S&P 500 index dropping to +4.9% from +7.6% on an ex-Energy basis. The ex-Energy earnings growth picture for the index as a whole looks a lot better once the Energy drag is excluded from the numbers.
There is plenty of growth this year beyond the Energy sector, with the Technology and Finance sectors as the main contributors after the Energy sector. The Energy sector’s growth contribution drops materially next year, with the Technology and Finance sectors taking back the leadership roles.
Expectations for 2017 Q4
Total Q4 earnings are expected to be up +8.6% from the same period last year +6.6% higher revenues. 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 10 of the 16 Zacks sectors have come down since the start of the quarter, with estimates for the remaining 6 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.
Unlike the year-over-year growth pace, the dollar amount of total earnings is on track to reach a new all-time quarterly record.
Please note that the June quarter tally in the chart above was a new all-time quarterly record for the S&P 500 index. But the record isn’t expected to last much longer, with each of the next two quarterly tallies surpassing the preceding period’s record.
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 more than doubled the market from 1988 through 2016. Its average gain has been a stellar +25% 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.
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 http://www.zacks.com/performancefor information about the performance numbers displayed in this press release.
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Zacks Earnings Trends Highlights: ExxonMobil and Chevron
For Immediate Release
Chicago, IL – December 1, 2017 – Zacks Director of Research Sheraz Mian says, “We will start getting the earnings Q4 results in about two weeks’ time, though the reporting season will really get going only in the second week of the New Year.”
Earnings Growth to Accelerate for 2018
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 will start getting the earnings Q4 results in about two weeks’ time, though the reporting season will really get going only in the second week of the New Year.
• Total Q4 earnings are expected to be up +8.6% from the same period last year on +6.6% higher revenues. The revisions trend for Q4 estimates has been very favorable, with earnings estimates holding up a lot better relative to other comparable periods.
• The Q3 is effectively over, with results from 494 S&P 500 members already out. Total earnings for the 494 S&P 500 members that have reported already are up +6.5% from the same period last year on +5.8% higher revenues, with 72.5% beating EPS estimates and 67.2% beating revenue estimates.
• While Q3 earnings growth lagged the preceding two quarters’ double-digit growth pace, revenue growth showed steady acceleration. Q3 earnings growth starts looking comparable to the preceding two quarters once the Finance sector’s drag is excluded from the results.
• Excluding the Finance sector, Q3 earnings growth improves to +10.3% from +6.3%. 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 turned out to be a good one for the Energy, Industrial Products, Technology, Construction, Business Services, and Medical sectors.
• For full-year 2017, total earnings for the S&P 500 index are expected to be up +7.6% on +5% higher revenues, which would follow +0.7% earnings growth on +2.2% higher revenues in 2016. Index earnings are expected to be up +11.6% in 2018 and +9.5% in 2019.
• Earnings growth turned positive in Q3 for the small-cap S&P 600 index, with total earnings for the index expected to be up +5.2% from the same period last year on +5.8% higher revenues. This follows 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, Autos, Construction, 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 falling to +5.7% (from +5.8%) on an ex-Finance basis.
Our earnings discussion is typically focused on quarterly results. But since we are currently in an in-between period when the Q3 earnings season has ended while the Q4 earnings season is still a few weeks away, a step back from the quarterly numbers and a look at the annual view makes sense.
Earnings growth resumed in 2017, after flat-lining in the preceding two years, with total S&P 500 earnings are on track to increase +7.6% this year on +5% higher revenues. But the growth pace is expected to accelerate in 2018 and 2019, with total earnings for the index expected to be increase +11.6% and +9.5%, respectively.
A big drag on earnings growth in the preceding two years was the sharp decline in oil prices and the impact that it had on the aggregate earnings picture. The Energy sector brought in $108.1 billion in aggregate earnings in 2014 and accounted for 10.1% of all S&P 500 earnings that year. The sector’s earnings dropped to $40 billion in 2015, accounting for 3.7% of all index earnings in 2015. In 2016, the sector earned only $9.2 billion, with its contribution to overall index earnings dropping below the 1% level. The picture has improved now, with the sector’s 2017 earnings on track to reach $39 billion, barely reaching the 2015 level.
The improvement we are seeing in the Energy sector’s earnings picture this year is a big reason for the aggregate growth resumption, with the 2017 earnings growth for the S&P 500 index dropping to +4.9% from +7.6% on an ex-Energy basis. The ex-Energy earnings growth picture for the index as a whole looks a lot better once the Energy drag is excluded from the numbers.
There is plenty of growth this year beyond the Energy sector, with the Technology and Finance sectors as the main contributors after the Energy sector. The Energy sector’s growth contribution drops materially next year, with the Technology and Finance sectors taking back the leadership roles.
Expectations for 2017 Q4
Total Q4 earnings are expected to be up +8.6% from the same period last year +6.6% higher revenues. 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 10 of the 16 Zacks sectors have come down since the start of the quarter, with estimates for the remaining 6 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.
Unlike the year-over-year growth pace, the dollar amount of total earnings is on track to reach a new all-time quarterly record.
Please note that the June quarter tally in the chart above was a new all-time quarterly record for the S&P 500 index. But the record isn’t expected to last much longer, with each of the next two quarterly tallies surpassing the preceding period’s record.
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 more than doubled the market from 1988 through 2016. Its average gain has been a stellar +25% per year. See these high-potential stocks free >>.
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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 http://www.zacks.com/performancefor information about the performance numbers displayed in this press release.