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Apple, Spotify, General Electric and Exxon are part of Zacks Earnings Preview
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For Immediate Release
Chicago, IL – July 29, 2019 – Zacks.com releases the list of companies likely to issue earnings surprises. This week’s list includes Apple (AAPL - Free Report) , Spotify (SPOT - Free Report) , General Electric (GE - Free Report) and Exxon (XOM - Free Report) .
A Reassuring Earnings Picture
The Technology sector has helped stabilize the aggregate earnings growth picture, with Q2 no longer expected to be in negative territory. The picture beyond the Technology space has been decent enough as well, notwithstanding the tariffs overhang on a number of trade-exposed industries.
With results from 44% of S&P 500 members already out, we haven’t seen any major negative surprises. We expect this reassuring and generally favorable trend to continue this week as we enter the second half of the Q2 reporting cycle.
This week is the busiest of the Q2 earnings season, with almost 1,000 companies reporting results, including 163 S&P 500 members. This week’s reporting docket is comprised of a representative cross section of the index, ranging from Apple and Spotify to General Electric and Exxon. By the end of this week, we will have seen Q2 results from 75% of S&P 500 members.
Here are the key takeaways from the Q2 earnings season after seeing results from 220 S&P 500 members through Friday, July 26th:
First, no major surprises on the growth front, which we knew will be anemic. We should keep in mind however that the growth challenge is more a function of tough comparisons to last year’s record results than a cyclical downturn in profitability.
Total earnings for the 220 index members that have reported are up +4.7% from the same period last year on +5.2% higher revenues. Earnings and revenue growth for the same cohort of companies had been +3% and +5.3% in the preceding earnings season, respectively. In other words, earnings growth is tracking modestly above what we had seen in the March quarter and revenue growth is almost even.
Earnings growth for the quarter was expected to be in negative territory before this earnings season got underway. But the blended growth rate, which combines the actual results that have come out with estimates for the still-to-come companies is for flat growth (0% growth) on +4.1% revenue growth. This could change as we go through the remainder of this earnings season. But at least at this stage, Q2 growth is no longer negative.
Second, positive EPS surprises are about in-line with historical trends while the proportion of these companies beating revenue estimates is notably on the weaker side.
For the 220 index members that have reported results already, 78.2% are beating EPS estimates and 57.3% are beating revenue estimates. For the same cohort of companies, the proportion of positive EPS and revenue surprises was 78.2% and 57.3% in the Q1 earnings season.
Third, estimates for 2019 Q3 are coming down more than what we saw in the comparable period for the preceding two quarters, but about in-line with historical trends.
Estimates for full-year 2019 are coming down as well, though the magnitude of negative revisions is a lot lower currently than had been the case at the start of the year.
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/performance for information about the performance numbers displayed in this press release.
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Apple, Spotify, General Electric and Exxon are part of Zacks Earnings Preview
For Immediate Release
Chicago, IL – July 29, 2019 – Zacks.com releases the list of companies likely to issue earnings surprises. This week’s list includes Apple (AAPL - Free Report) , Spotify (SPOT - Free Report) , General Electric (GE - Free Report) and Exxon (XOM - Free Report) .
A Reassuring Earnings Picture
The Technology sector has helped stabilize the aggregate earnings growth picture, with Q2 no longer expected to be in negative territory. The picture beyond the Technology space has been decent enough as well, notwithstanding the tariffs overhang on a number of trade-exposed industries.
With results from 44% of S&P 500 members already out, we haven’t seen any major negative surprises. We expect this reassuring and generally favorable trend to continue this week as we enter the second half of the Q2 reporting cycle.
This week is the busiest of the Q2 earnings season, with almost 1,000 companies reporting results, including 163 S&P 500 members. This week’s reporting docket is comprised of a representative cross section of the index, ranging from Apple and Spotify to General Electric and Exxon. By the end of this week, we will have seen Q2 results from 75% of S&P 500 members.
Here are the key takeaways from the Q2 earnings season after seeing results from 220 S&P 500 members through Friday, July 26th:
First, no major surprises on the growth front, which we knew will be anemic. We should keep in mind however that the growth challenge is more a function of tough comparisons to last year’s record results than a cyclical downturn in profitability.
Total earnings for the 220 index members that have reported are up +4.7% from the same period last year on +5.2% higher revenues. Earnings and revenue growth for the same cohort of companies had been +3% and +5.3% in the preceding earnings season, respectively. In other words, earnings growth is tracking modestly above what we had seen in the March quarter and revenue growth is almost even.
Earnings growth for the quarter was expected to be in negative territory before this earnings season got underway. But the blended growth rate, which combines the actual results that have come out with estimates for the still-to-come companies is for flat growth (0% growth) on +4.1% revenue growth. This could change as we go through the remainder of this earnings season. But at least at this stage, Q2 growth is no longer negative.
Second, positive EPS surprises are about in-line with historical trends while the proportion of these companies beating revenue estimates is notably on the weaker side.
For the 220 index members that have reported results already, 78.2% are beating EPS estimates and 57.3% are beating revenue estimates. For the same cohort of companies, the proportion of positive EPS and revenue surprises was 78.2% and 57.3% in the Q1 earnings season.
Third, estimates for 2019 Q3 are coming down more than what we saw in the comparable period for the preceding two quarters, but about in-line with historical trends.
Estimates for full-year 2019 are coming down as well, though the magnitude of negative revisions is a lot lower currently than had been the case at the start of the year.
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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/performance for information about the performance numbers displayed in this press release.