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Technology Stock Earnings on Jul 19: SYNT, MSFT and SWKS
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The second-quarter 2018 earnings season commenced on a positive note with earnings of 48 S&P 500 members up 23% on a year-over-year basis driven by 10% growth in revenues, per the latest Earnings Outlook.
Overall, second-quarter earnings for S&P 500 companies are anticipated to be up 20.4% from the year-ago quarter on revenues that are estimated to increase 8.3%.
Technology is one of the 11 sectors anticipated to report double-digit earnings growth this quarter. Stocks from the sector are expected to record top-and bottom line growth of 11% and 23.5%, respectively.
We note that only 6.7% of the total market capitalization in the technology sector has reported till now.
Total earnings and revenues are up 49.6% and 16.4%, respectively, on a year-over-year basis with 100% of the companies beating top and bottom-line estimates. Notably, International Business Machines (IBM - Free Report) , which released second-quarter results yesterday, surpassed estimates on both counts.
What’s Driving the Tech Sector?
The sector continues to benefit from strong demand environment for digital transformation. Notably, cloud computing, predictive analysis, artificial intelligence (AI), self-driving vehicles, digital personal assistants and Internet of Things (IoT) have been key drivers in this regard.
Moreover, the aforementioned factors are giving a solid boost to the Semiconductor industry, which is a major contributor to growth. Semiconductor stocks also stand to gain massively from improving PC shipment, which is backed by strong demand in business markets due to migration to Windows 10.
However, this does not ensure earnings beat for all companies in the space. It should be noted that a company’s earnings outperformance is dependent on the overall business environment as well as management’s ability to implement operating and strategic plans.
What Our Model Says
According to the Zacks model, a company with a Zacks Rank #1 (Strong Buy), 2 (Buy) or #3 (Hold) has a good chance of beating estimates if it also has a positive Earnings ESP. The Sell-rated stocks (Zacks Rank #4 or #5) are best avoided.
You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Here we take a look at three technology companies that are set to report on Jul 19 after market close.
Troy, MI-based Syntel is a global provider of integrated information technology and knowledge process services. The company has a favorable combination of a Zacks Rank #1 and an Earnings ESP of +11.79% ahead of its second-quarter 2018 results. You can see the complete list of today’s Zacks #1 Rank stocks here.
We note that the company beat the Zacks Consensus Estimate in the trailing four quarters, with an average positive earnings surprise of 29.59%.
Microsoft’s (MSFT - Free Report) fourth-quarter fiscal 2018 results are likely to benefit from cloud computing initiatives & Azure Adoption. Also, Office 365 & synergies from acquisitions bode well for the company. (Read more: Factors Setting the Tone for Microsoft's Q4 Earnings)
Notably, the company has a positive record of earnings surprises in the trailing four quarters, with an average beat of 19.5%. Moreover, Microsoft also has a favorable combination of a Zacks Rank #3 and an Earnings ESP of +0.37%.
Skyworks (SWKS - Free Report) results are expected to benefit from its growing clout in the connectivity solutions and 5G markets.
The emergence of connected homes, autonomous vehicles, AI, augmented reality, wearables and network infrastructure presents significant growth opportunity for Skyworks’ connectivity solutions. (Read more: Skyworks Solutions Q3 Earnings: Is a Beat in Store?)
The company beat the Zacks Consensus Estimate in the trailing four quarters, with an average positive surprise of 3.8%. Furthermore, the favorable combination of Zacks Rank #3 and Earnings ESP of +0.58% makes us optimistic.
It's hard to believe, even for us at Zacks. But while the market gained +21.9% in 2017, our top stock-picking screens have returned +115.0%, +109.3%, +104.9%, +98.6%, and +67.1%.
And this outperformance has not just been a recent phenomenon. Over the years it has been remarkably consistent. From 2000 - 2017, the composite yearly average gain for these strategies has beaten the market more than 19X over. Maybe even more remarkable is the fact that we're willing to share their latest stocks with you without cost or obligation.
Image: Bigstock
Technology Stock Earnings on Jul 19: SYNT, MSFT and SWKS
The second-quarter 2018 earnings season commenced on a positive note with earnings of 48 S&P 500 members up 23% on a year-over-year basis driven by 10% growth in revenues, per the latest Earnings Outlook.
Overall, second-quarter earnings for S&P 500 companies are anticipated to be up 20.4% from the year-ago quarter on revenues that are estimated to increase 8.3%.
Technology is one of the 11 sectors anticipated to report double-digit earnings growth this quarter. Stocks from the sector are expected to record top-and bottom line growth of 11% and 23.5%, respectively.
We note that only 6.7% of the total market capitalization in the technology sector has reported till now.
Total earnings and revenues are up 49.6% and 16.4%, respectively, on a year-over-year basis with 100% of the companies beating top and bottom-line estimates. Notably, International Business Machines (IBM - Free Report) , which released second-quarter results yesterday, surpassed estimates on both counts.
What’s Driving the Tech Sector?
The sector continues to benefit from strong demand environment for digital transformation. Notably, cloud computing, predictive analysis, artificial intelligence (AI), self-driving vehicles, digital personal assistants and Internet of Things (IoT) have been key drivers in this regard.
Moreover, the aforementioned factors are giving a solid boost to the Semiconductor industry, which is a major contributor to growth. Semiconductor stocks also stand to gain massively from improving PC shipment, which is backed by strong demand in business markets due to migration to Windows 10.
However, this does not ensure earnings beat for all companies in the space. It should be noted that a company’s earnings outperformance is dependent on the overall business environment as well as management’s ability to implement operating and strategic plans.
What Our Model Says
According to the Zacks model, a company with a Zacks Rank #1 (Strong Buy), 2 (Buy) or #3 (Hold) has a good chance of beating estimates if it also has a positive Earnings ESP. The Sell-rated stocks (Zacks Rank #4 or #5) are best avoided.
You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Here we take a look at three technology companies that are set to report on Jul 19 after market close.
Troy, MI-based Syntel is a global provider of integrated information technology and knowledge process services. The company has a favorable combination of a Zacks Rank #1 and an Earnings ESP of +11.79% ahead of its second-quarter 2018 results. You can see the complete list of today’s Zacks #1 Rank stocks here.
We note that the company beat the Zacks Consensus Estimate in the trailing four quarters, with an average positive earnings surprise of 29.59%.
Syntel, Inc. Price and EPS Surprise
Syntel, Inc. Price and EPS Surprise | Syntel, Inc. Quote
Microsoft’s (MSFT - Free Report) fourth-quarter fiscal 2018 results are likely to benefit from cloud computing initiatives & Azure Adoption. Also, Office 365 & synergies from acquisitions bode well for the company. (Read more: Factors Setting the Tone for Microsoft's Q4 Earnings)
Notably, the company has a positive record of earnings surprises in the trailing four quarters, with an average beat of 19.5%. Moreover, Microsoft also has a favorable combination of a Zacks Rank #3 and an Earnings ESP of +0.37%.
Microsoft Corporation Price and EPS Surprise
Microsoft Corporation Price and EPS Surprise | Microsoft Corporation Quote
Skyworks (SWKS - Free Report) results are expected to benefit from its growing clout in the connectivity solutions and 5G markets.
The emergence of connected homes, autonomous vehicles, AI, augmented reality, wearables and network infrastructure presents significant growth opportunity for Skyworks’ connectivity solutions. (Read more: Skyworks Solutions Q3 Earnings: Is a Beat in Store?)
The company beat the Zacks Consensus Estimate in the trailing four quarters, with an average positive surprise of 3.8%. Furthermore, the favorable combination of Zacks Rank #3 and Earnings ESP of +0.58% makes us optimistic.
Skyworks Solutions, Inc. Price and EPS Surprise
Skyworks Solutions, Inc. Price and EPS Surprise | Skyworks Solutions, Inc. Quote
Today's Stocks from Zacks' Hottest Strategies
It's hard to believe, even for us at Zacks. But while the market gained +21.9% in 2017, our top stock-picking screens have returned +115.0%, +109.3%, +104.9%, +98.6%, and +67.1%.
And this outperformance has not just been a recent phenomenon. Over the years it has been remarkably consistent. From 2000 - 2017, the composite yearly average gain for these strategies has beaten the market more than 19X over. Maybe even more remarkable is the fact that we're willing to share their latest stocks with you without cost or obligation.
See Them Free>>