Today's Must Read
Wireless Subscriber Gain Drives Comcast's (CMCSA) Prospects
Medtronic (MDT) Market Share Grows, MedSurg Prospect Robust
Thursday, August 4, 2022
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 Q2 earnings season and new research reports on 16 major stocks, including Visa Inc. (V), Comcast Corporation (CMCSA), and Medtronic plc (MDT). 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 >>>
Q2 Earnings Season Scorecard
Including all the reports that came out the morning of August 4th, we now have Q2 results from 410 S&P 500 members or 82% of the index's total membership.
Total earnings for these companies are up +7.8% from the same period last year on +14.8% higher revenues, with 77.3% beating EPS estimates and 68.8% beating revenue estimates.
The proportion of these 410 index members beating both EPS and revenue estimates is 58.5%.
As we have been pointing out since the start of this reporting cycle, the EPS and revenue beats percentages are tracking towards the lower end of the historical range for this group of stocks.
That said, the market has found these results fairly reassuring, particularly given concerns about a Fed-driven economic slowdown or even a recession.
To that end, while some companies have guided lower, citing trends in consumer spending, FX headwinds or the pre-existing issues of inflationary and logistical challenges, the overall tone and substance of management guidance and commentary has been good enough.
Estimates for the second half of the year and next year have come down a bit, but the declines are nowhere near what would be consistent with a significant economic slowdown or recession.
Looking at Q2 as a whole, combining the actual results from the 410 index members that have reported with estimates for the still-to-come companies, earnings and revenues are on track to be up +6.3% and +13.7% from the year-earlier level, respectively.
The aggregate total of Q2 earnings for the index are on track to reach a new all-time quarterly record, surpassing the level reached in 2021 Q3.
Today's Featured Analyst Reports
Visa shares have modestly lagged Mastercard in the year-to-date period (-1.1% vs. -0.2%), but they have handily outperformed the S&P 500 index (down -13.1%) and the Zacks Finance sector (-12.9%). The company is undoubtedly faced with a number of near-term challenges, but the long-term outlook remains positive, as came through in the recent quarterly report.
Visa’s fiscal third-quarter earnings beat estimates. Its numerous buyouts and alliances paved the way for long-term growth and consistently drove its revenues. Constant investments in technology are solidifying its position in the payments market. A shift in payments to the digital mode is a boon.
The coronavirus vaccine rollouts and the gradual revival of consumer confidence will keep driving spending, expanding business volumes in turn. Backed by its strong cash position, it remains committed to boosting its shareholder value.
Comcast shares have declined -31.5% over the past year against the Zacks Cable Television industry’s decline of -35.0%, reflecting persistent trends in cord cutting and a leveraged balance sheet in a backdrop of tightening monetary policy. The second-quarter 2022 results reflected slowing broadband user base addition primarily due to reversal of pandemic trends and increased competition.
Nevertheless, the company benefited from a growing wireless subscriber base. Comcast’s plan to transition to DOCSIS 4.0 is noteworthy in this regard. The technology will help it in expanding much faster and at a lower cost compared to competitors.
Recovery in park and movie business bodes well for Comcast’s profitability. Its streaming service Peacock is a key catalyst in driving broadband sales. Strong free cash flow generation ability is noteworthy.
Medtronic shares have outperformed the Zacks Medical - Products industry over the past 2 years (+0.9% vs. -38.4%) on the back of a succesful global expansion effort. Meanwhile, within Cardiovascular, the company is gaining market share, banking on recent product launches.
Within MedSurg, Medtronic is scaling its production of Hugo RAS. Innovations and market expansion efforts are helping it offset the impact of the high inflation and supply disruptions.
Medtronic’s strong liquidity position should allow it to meet its near-term debt obligations. All these factors support our bullish stance on the stock.
Other noteworthy reports we are featuring today include Lockheed Martin Corporation (LMT), ServiceNow, Inc. (NOW), and Chubb Limited (CB).
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>>>