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Zacks Earnings Trends Highlights: Alphabet and Microsoft
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For Immediate Release
Chicago, IL – July 26, 2018 – Zacks Director of Research Sheraz Mian says, “Total earnings for the 147 S&P 500 members that have reported Q2 results are up +23.3% on +9.1% higher revenues.”
Q2 Results Show Strong Revenue Momentum
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:
• Q2 results show all-around strength, with very pronounced momentum on the revenues front.
• Total earnings for the 147 S&P 500 members that have reported Q2 results are up +23.3% on +9.1% higher revenues. The proportion of these companies beating EPS and revenue estimates is tracking above other recent periods, with revenue beats at this stage tracking 15 percentage points above the trailing 12-qurater average.
• Total earnings for the 40.9% market cap of the Tech sector that has reported already are up +35.3% on +9.9% higher revenues, with 93.8% beating EPS estimates and 81.3% beating revenue estimates.
• Total earnings for the 57.9% market cap of the Finance sector that has reported already are up +21.8% on +6.5% higher revenues, with 78.4% beating EPS estimates and 70.3% beating revenue estimates.
• With results from more than four-fifths of the sector’s total market cap in the S&P 500 index out, the Transportation sector is onto a strong showing, with +24.6% and +9.7% earnings and revenue growth and all the companies beating EPS and revenue estimates.
• For the S&P 500 index as a whole, total Q2 earnings are expected to be up +22.3% from the same period last year on +8.4% higher revenues, with 12 of the 16 Zacks sectors expected to have double-digit earnings growth.
• Tech sector earnings are expected to be up +28.7% on +11.6% higher revenues, which would follow +31.1% earnings growth on +13.1% revenue growth in Q1. Finance sector earnings are expected to be up +24.1% from the same period last year on +4.4% higher revenues.
• Other major sectors with strong expected growth in Q2 include Energy (+138.9% earnings growth), Basic Materials (+53.1%), Industrial Products (+28%) and Retail (+18.4%). The Autos and Conglomerates sectors are the only ones expected to have lower Q2 earnings compared to the year-earlier level.
• For the small-cap S&P 600 index, we have Q2 results from 95 companies or only 15.8% of the index’s total membership. Total earnings for these companies are up +22.2% from the same period last year on +14.2% higher revenues, with 74.4% beating EPS estimates and 72.6% beating revenue estimates. This is a better performance than we have seen from the same group of 95 companies in other recent periods.
• For the small-cap S&P 600 index, total Q2 earnings are expected to be up +28.7% on +8.4% higher revenues, which would follow +24.2% earnings growth on +8.6% revenue growth in 2018 Q1.
• For full-year 2018, total earnings for the S&P 500 index are expected to be up +20.4% on +6.2% higher revenues. For full-years 2019 and 2020, total earnings are expected to be up +9.9% and +9.6%, respectively. Revenues for the index are expected to be increase by +4.8% in 2019, and +4.5% in 2020.
• The implied ‘EPS’ for the index, calculated using current 2018 P/E of 17.6X and index close, as of July 24th, is $156.71. Using the same methodology, the index ‘EPS’ works out to $172.15 for 2019 (P/E of 16X) and $188.77 for 2020 (P/E of 14.6X). The multiples for 2018, 2019 and 2020 have been calculated using the index’s total market cap and aggregate bottom-up earnings for each year.
Q2 earnings season Scorecard (as of July 25th, 2018)
Total earnings for the 147 index members that combined account for 40.9% of the index’s total market cap have reported Q2 results are up +23.3% on +9.1% higher revenues, with 83.7% beating EPS estimates and 74.8% beating revenue estimates.
This is a very strong showing from these 147 S&P 500 members relative to other recent periods, particularly with respect to the proportion of positive EPS and revenue surprises.
Plenty of Tech sector results are still awaited, but the results that have come out already (25.4% of the sector’s companies in the S&P 500 index that combined account for 46% of the sector’s market cap have reported already) show strong growth and momentum.
The roughly doubling of Alphabet’s (GOOGL - Free Report) earnings on more than +25% top-line growth. Microsoft’s (MSFT - Free Report) earnings are up +14.4% from the same period last year on +21.8% higher revenues. These and other results provide a good set up for the coming Tech sector results.
Total Tech sector earnings at this stage are up +35.3% on +9.9% higher revenues, with 93.8% beating EPS estimates and 81.3% beating revenue estimates. The growth pace and the proportion of these Tech companies beating estimates is tracking above what we had seen from the same companies in other recent periods.
Q2 Expectations as a Whole
Combining the actual results from the 147 index members with estimates for the still-to-come 353 companies, total Q2 earnings are expected to be up +22.3% from the same period last year on +8.4% higher revenues, with double-digit earnings growth for 12 of the 16 Zacks sectors, including Finance and Technology. This would be the 3rd quarter in a row of double-digit earnings growth for the index, a trend that is currently expected to continue in the second half of the year as well.
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.
Zacks Editor-in-Chief Goes "All In" on This Stock
Full disclosure, Kevin Matras now has more of his own money in one particular stock than in any other. He believes in its short-term profit potential and also in its prospects to more than double by 2019. Today he reveals and explains his surprising move in a new Special Report.
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.
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Zacks Earnings Trends Highlights: Alphabet and Microsoft
For Immediate Release
Chicago, IL – July 26, 2018 – Zacks Director of Research Sheraz Mian says, “Total earnings for the 147 S&P 500 members that have reported Q2 results are up +23.3% on +9.1% higher revenues.”
Q2 Results Show Strong Revenue Momentum
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:
• Q2 results show all-around strength, with very pronounced momentum on the revenues front.
• Total earnings for the 147 S&P 500 members that have reported Q2 results are up +23.3% on +9.1% higher revenues. The proportion of these companies beating EPS and revenue estimates is tracking above other recent periods, with revenue beats at this stage tracking 15 percentage points above the trailing 12-qurater average.
• Total earnings for the 40.9% market cap of the Tech sector that has reported already are up +35.3% on +9.9% higher revenues, with 93.8% beating EPS estimates and 81.3% beating revenue estimates.
• Total earnings for the 57.9% market cap of the Finance sector that has reported already are up +21.8% on +6.5% higher revenues, with 78.4% beating EPS estimates and 70.3% beating revenue estimates.
• With results from more than four-fifths of the sector’s total market cap in the S&P 500 index out, the Transportation sector is onto a strong showing, with +24.6% and +9.7% earnings and revenue growth and all the companies beating EPS and revenue estimates.
• For the S&P 500 index as a whole, total Q2 earnings are expected to be up +22.3% from the same period last year on +8.4% higher revenues, with 12 of the 16 Zacks sectors expected to have double-digit earnings growth.
• Tech sector earnings are expected to be up +28.7% on +11.6% higher revenues, which would follow +31.1% earnings growth on +13.1% revenue growth in Q1. Finance sector earnings are expected to be up +24.1% from the same period last year on +4.4% higher revenues.
• Other major sectors with strong expected growth in Q2 include Energy (+138.9% earnings growth), Basic Materials (+53.1%), Industrial Products (+28%) and Retail (+18.4%). The Autos and Conglomerates sectors are the only ones expected to have lower Q2 earnings compared to the year-earlier level.
• For the small-cap S&P 600 index, we have Q2 results from 95 companies or only 15.8% of the index’s total membership. Total earnings for these companies are up +22.2% from the same period last year on +14.2% higher revenues, with 74.4% beating EPS estimates and 72.6% beating revenue estimates. This is a better performance than we have seen from the same group of 95 companies in other recent periods.
• For the small-cap S&P 600 index, total Q2 earnings are expected to be up +28.7% on +8.4% higher revenues, which would follow +24.2% earnings growth on +8.6% revenue growth in 2018 Q1.
• For full-year 2018, total earnings for the S&P 500 index are expected to be up +20.4% on +6.2% higher revenues. For full-years 2019 and 2020, total earnings are expected to be up +9.9% and +9.6%, respectively. Revenues for the index are expected to be increase by +4.8% in 2019, and +4.5% in 2020.
• The implied ‘EPS’ for the index, calculated using current 2018 P/E of 17.6X and index close, as of July 24th, is $156.71. Using the same methodology, the index ‘EPS’ works out to $172.15 for 2019 (P/E of 16X) and $188.77 for 2020 (P/E of 14.6X). The multiples for 2018, 2019 and 2020 have been calculated using the index’s total market cap and aggregate bottom-up earnings for each year.
Q2 earnings season Scorecard (as of July 25th, 2018)
Total earnings for the 147 index members that combined account for 40.9% of the index’s total market cap have reported Q2 results are up +23.3% on +9.1% higher revenues, with 83.7% beating EPS estimates and 74.8% beating revenue estimates.
This is a very strong showing from these 147 S&P 500 members relative to other recent periods, particularly with respect to the proportion of positive EPS and revenue surprises.
Plenty of Tech sector results are still awaited, but the results that have come out already (25.4% of the sector’s companies in the S&P 500 index that combined account for 46% of the sector’s market cap have reported already) show strong growth and momentum.
The roughly doubling of Alphabet’s (GOOGL - Free Report) earnings on more than +25% top-line growth. Microsoft’s (MSFT - Free Report) earnings are up +14.4% from the same period last year on +21.8% higher revenues. These and other results provide a good set up for the coming Tech sector results.
Total Tech sector earnings at this stage are up +35.3% on +9.9% higher revenues, with 93.8% beating EPS estimates and 81.3% beating revenue estimates. The growth pace and the proportion of these Tech companies beating estimates is tracking above what we had seen from the same companies in other recent periods.
Q2 Expectations as a Whole
Combining the actual results from the 147 index members with estimates for the still-to-come 353 companies, total Q2 earnings are expected to be up +22.3% from the same period last year on +8.4% higher revenues, with double-digit earnings growth for 12 of the 16 Zacks sectors, including Finance and Technology. This would be the 3rd quarter in a row of double-digit earnings growth for the index, a trend that is currently expected to continue in the second half of the year as well.
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.
Zacks Editor-in-Chief Goes "All In" on This Stock
Full disclosure, Kevin Matras now has more of his own money in one particular stock than in any other. He believes in its short-term profit potential and also in its prospects to more than double by 2019. Today he reveals and explains his surprising move in a new Special Report.
Download it free >>
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 >>
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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.