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General Electric, Pepsi, Coke, Deere and Under Amour are part of Zacks Earnings Preview
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For Immediate Release
Chicago, IL – Feb 12, 2018 – Zacks.com releases the list of companies likely to issue earnings surprises. This week’s list includes General Electric (GE - Free Report) , Pepsi (PEP - Free Report) , Coke (KO - Free Report) , Deere (DE - Free Report) and Under Amour (UAA - Free Report) .
Every day, Zacks.com makes their Bull Stock of the Day available, free of charge. To see it, click here.
Market Ignored Impressive Earnings Performance
The market’s head-long plunge over the past week or so has been squarely in the face of an extremely impressive display of earnings power from corporate America. As we have been pointing out since the start of the Q4 earnings season, not only is an above average proportion of companies beating top and bottom line expectations, but estimates for the current period are also materially going up.
Market participants are undoubtedly in the grip of a fear; they appear to be dumping stocks first and asking questions later. There is some basis for the fear. After all, if interest rates were breaking out with inflation finally showing up on the horizon, then it would make sense for prices to adjust lower. Stock prices are nothing but the discounted values of future cash flows. And if the discount rates were going up, then everything else equal, prices should drop.
But we know that ‘everything else isn’t equal.’ Estimates for earnings and cash flows are going up at a pace that we haven’t seen in years.
And it’s not just 2018 Q1 estimates that are going, estimates for the following quarters and full-year 2018 are also going up.
Impressively, the revisions trend is broad-based and not concentrated in one or a few sectors. Of the 16 Zacks sectors, Q1 estimates have gone up for 15 sectors. The Conglomerates sector is the only one that has estimates come down, which is a function of the never-ending General Electric saga.
The ongoing market sell-off is likely nothing more than a correction. It is definitely not a function of an impending fundamentals cliff. The fundamentals story is about as solid and reassuring as it has even been in the recent past. Unless 10-year Treasury yields were headed towards 4% in a short span, I remain unconvinced of the pullback’s staying power.
What this means is that the bull run that got underway in 2009 is still in place. Rationality typically takes the back seat in the stampede towards the exits, but sanity does eventually return. It always does. If nothing else, market valuations are starting to become very attractive. The S&P 500 index is now trading 16.9X forward 12-month consensus estimates, the lowest point since the November 2016 election. The index was trading as high as 19X in late November.
Q4 Earnings Season Scorecard (as of Friday, February 9, 2018)
Total earnings for the 341 S&P 500 members that have reported results already are up +14.7% from the same period last year on +9.3% higher revenues, with 78.6% beating EPS estimates and 76.8% beating revenue estimates. The proportion of companies beating both EPS and revenue estimates is 63.6%.
Any way you look at these results, the Q4 earnings season is on track to be very good. Not only is growth tracking above what we had seen from the same group of 341 index members, but a record proportion are beating EPS and revenue estimates.
The comparison charts below highlight the very strong revenue momentum that’s coming out of the Q4 earnings season, a truly impressive performance.
Expectations for Q4 as a Whole
We have more than 300 companies on deck to report results this week, including 57 S&P 500 members. Pepsi, Coke, Deere and Under Amour are some of the notable reports coming out this week.
Looking at Q4 as a whole, combining the actual results from the 341 index members with estimates from the still-to-come 159 companies, total earnings are expected to be up +14.1% from the same period last year on +8.2% higher revenues. This would follow +6.7% earnings growth in 2017 Q3 on +5.8% growth in revenues. This will be the highest quarterly growth rate in years.
Q4 earnings growth expectations should pick up in Q4 after dipping in the preceding quarter and continue accelerating going forward.
The Small-Cap Scorecard – S&P 600 Index
For the S&P 600 index, we now have Q4 results from 240 index members or 39.9% of the index’s total membership. Total earnings for these 240 index members are up +12.1% from the same period last year on +10.3% higher revenues, with 69.6% beating EPS estimates and 72.1% beating revenue estimates.
Zacks.com is a property of Zacks Investment Research, Inc., which was formed in 1978. The later formation of the Zacks Rank, a proprietary stock picking system; continues to outperform the market by nearly a 3 to 1 margin. The best way to unlock the profitable stock recommendations and market insights of Zacks Investment Research is through our free daily email newsletter; Profit from the Pros. In short, it's your steady flow of Profitable ideas GUARANTEED to be worth your time!Register for your free subscription to Profit from the Pros.
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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General Electric, Pepsi, Coke, Deere and Under Amour are part of Zacks Earnings Preview
For Immediate Release
Chicago, IL – Feb 12, 2018 – Zacks.com releases the list of companies likely to issue earnings surprises. This week’s list includes General Electric (GE - Free Report) , Pepsi (PEP - Free Report) , Coke (KO - Free Report) , Deere (DE - Free Report) and Under Amour (UAA - Free Report) .
To see more earnings analysis, visit https://at.zacks.com/?id=3207.
Every day, Zacks.com makes their Bull Stock of the Day available, free of charge. To see it, click here.
Market Ignored Impressive Earnings Performance
The market’s head-long plunge over the past week or so has been squarely in the face of an extremely impressive display of earnings power from corporate America. As we have been pointing out since the start of the Q4 earnings season, not only is an above average proportion of companies beating top and bottom line expectations, but estimates for the current period are also materially going up.
Market participants are undoubtedly in the grip of a fear; they appear to be dumping stocks first and asking questions later. There is some basis for the fear. After all, if interest rates were breaking out with inflation finally showing up on the horizon, then it would make sense for prices to adjust lower. Stock prices are nothing but the discounted values of future cash flows. And if the discount rates were going up, then everything else equal, prices should drop.
But we know that ‘everything else isn’t equal.’ Estimates for earnings and cash flows are going up at a pace that we haven’t seen in years.
And it’s not just 2018 Q1 estimates that are going, estimates for the following quarters and full-year 2018 are also going up.
Impressively, the revisions trend is broad-based and not concentrated in one or a few sectors. Of the 16 Zacks sectors, Q1 estimates have gone up for 15 sectors. The Conglomerates sector is the only one that has estimates come down, which is a function of the never-ending General Electric saga.
The ongoing market sell-off is likely nothing more than a correction. It is definitely not a function of an impending fundamentals cliff. The fundamentals story is about as solid and reassuring as it has even been in the recent past. Unless 10-year Treasury yields were headed towards 4% in a short span, I remain unconvinced of the pullback’s staying power.
What this means is that the bull run that got underway in 2009 is still in place. Rationality typically takes the back seat in the stampede towards the exits, but sanity does eventually return. It always does. If nothing else, market valuations are starting to become very attractive. The S&P 500 index is now trading 16.9X forward 12-month consensus estimates, the lowest point since the November 2016 election. The index was trading as high as 19X in late November.
Q4 Earnings Season Scorecard (as of Friday, February 9, 2018)
Total earnings for the 341 S&P 500 members that have reported results already are up +14.7% from the same period last year on +9.3% higher revenues, with 78.6% beating EPS estimates and 76.8% beating revenue estimates. The proportion of companies beating both EPS and revenue estimates is 63.6%.
Any way you look at these results, the Q4 earnings season is on track to be very good. Not only is growth tracking above what we had seen from the same group of 341 index members, but a record proportion are beating EPS and revenue estimates.
The comparison charts below highlight the very strong revenue momentum that’s coming out of the Q4 earnings season, a truly impressive performance.
Expectations for Q4 as a Whole
We have more than 300 companies on deck to report results this week, including 57 S&P 500 members. Pepsi, Coke, Deere and Under Amour are some of the notable reports coming out this week.
Looking at Q4 as a whole, combining the actual results from the 341 index members with estimates from the still-to-come 159 companies, total earnings are expected to be up +14.1% from the same period last year on +8.2% higher revenues. This would follow +6.7% earnings growth in 2017 Q3 on +5.8% growth in revenues. This will be the highest quarterly growth rate in years.
Q4 earnings growth expectations should pick up in Q4 after dipping in the preceding quarter and continue accelerating going forward.
The Small-Cap Scorecard – S&P 600 Index
For the S&P 600 index, we now have Q4 results from 240 index members or 39.9% of the index’s total membership. Total earnings for these 240 index members are up +12.1% from the same period last year on +10.3% higher revenues, with 69.6% beating EPS estimates and 72.1% beating revenue estimates.
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Zacks.com is a property of Zacks Investment Research, Inc., which was formed in 1978. The later formation of the Zacks Rank, a proprietary stock picking system; continues to outperform the market by nearly a 3 to 1 margin. The best way to unlock the profitable stock recommendations and market insights of Zacks Investment Research is through our free daily email newsletter; Profit from the Pros. In short, it's your steady flow of Profitable ideas GUARANTEED to be worth your time!Register for your free subscription to Profit from the Pros.
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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.