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Research Daily

Sheraz Mian

Earnings on Track to Reach a New Quarterly Record


Trades from $3

Tuesday, April 27, 2021

The Zacks Research Daily presents the best research output of our analyst team. Today's Research Daily features a real-time update on the ongoing Q1 earnings season and new research reports on 16 major stocks, including The Procter & Gamble (PG), Verizon Communications (VZ), and Morgan Stanley (MS). These research reports have been hand-picked from the roughly 70 reports published by our analyst team today.

You can see all of today’s research reports here >>>

Q1 Earnings Season Scorecard

Including all of this morning's results, we now have Q1 results from 153 S&P 500 members or 30.6% of the index's total membership. Total earnings for these 153 companies are up +46% on +5.9% higher revenues, with 84.3% beating EPS estimates and 75.2% beating revenue estimates.

Excluding the Finance sector, whose Q1 results have been boosted by reserve releases and easy comparisons at the banks, earnings for the remainder of the index members that have reported would be up +10.3% from the same period last year.

This is a notably better performance relative to what we have been seeing from this group companies in other recent periods. 

Looking at Q1 as a whole, combining the actual results that have come out with estimates for the still-to-come companies, total earnings are on track to increase +31% on +6.8% higher revenues. Ex-Finance, Q1 earnings growth would be +17.7% on +7.1% higher revenues.

Total Q1 earnings are on track to reach a new quarterly record at $381.6 billion, surpassing the previous quarterly record set in the preceding period (2020 Q4) at $373.7 billion. This is very impressive since large parts of the Transportation and Consumer Discretionary sectors are still operating under debilitating Covid-related issues. 

Today's Featured Research Reports

Shares of The Procter & Gamble have outperformed the Zacks Soap and Cleaning Materials in the last one-year period (+12.2% vs. +0.3%). The Zacks analyst believes that Procter & Gamble stock has been benefiting from its robust earnings and sales surprise trend.

While it has reported earnings surprise for the past several quarters, revenues topped estimates for the fourth straight time in the fiscal third-quarter. Productivity savings as well as higher pricing boosted margins.

The company raised its free cash flow productivity target to more than 100% for fiscal 2021. However, currency headwinds and pandemic-related disruptions are likely to affect fiscal 2021 results to some extent.

(You can read the full research report on The Procter & Gamble here >>>)

Verizon shares have gained +1.6% over the last three months against the Zacks Wireless National industry’s gain of +5%. The Zacks analyst believes that Verizon is likely to benefit from a disciplined network strategy, including accelerated 5G deployment despite economic uncertainties stemming from the COVID-19 crisis.

The company expects to witness solid 5G momentum backed by a customer-centric business model and diligent execution of operational plans. It has augmented mid-band spectrum capacity with the C-Band airwaves buyout.

However, Verizon operates in an intensely competitive U.S. wireless market that strains margins. Also, hefty expenses on promotion and lucrative discounts to attract customers further hamper its profitability.

(You can read the full research report on Verizon here >>>)

Shares of Morgan Stanley have gained +71.7% in the past six months against the Zacks Investment Banking industry’s gain of +73%. The Zacks analyst believes that the company’s robust capital deployments will continue enhancing the shareholder value.

Meanwhile, the buyouts of Eaton Vance and E*Trade Financial are in sync with the company's efforts to focus less on capital markets driven revenue sources. These initiatives, along with increasing focus on corporate lending, are likely to continue supporting financials.

Although steadily increasing expenses, low rates and its significant dependence on capital-markets driven revenues make us apprehensive, a strong balance sheet is likely to continue supporting growth.

(You can read the full research report on Morgan Stanley here >>>)

Other noteworthy reports we are featuring today include Honeywell International (HON), Philip Morris International (PM) and Deere & Company (DE).

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Sheraz Mian

Director of Research

Note: Sheraz Mian heads the Zacks Equity Research department and is a well-regarded expert of aggregate earnings. He is frequently quoted in the print and electronic media and publishes the weekly Earnings Trends and Earnings Preview reports. If you want an email notification each time Sheraz publishes a new article, please click here>>>

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