Tuesday, April 30, 2024

Today's Research Daily features a real-time update on the Q1 earnings season, in addition to updated analyst reports on 16 major stocks, including Apple Inc. (AAPL), Walmart Inc. (WMT) and Chevron Corporation (CVX). 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 this morning's reports from McDonald's, Coke, 3M and others, we now have Q1 results from 267 S&P 500 members or 53.4% of the index's total membership. Total Q1 earnings for these companies are up +3.1% from the same period last year on +3.9% higher revenues, with 79% beating EPS estimates and 59.9% beating revenue estimates.

The proportion of these companies beating both EPS and revenue estimates is 52.8%. The 52.8% 'blended' beats percentage compares to 53.4% for this group of 267 index members in 2024 Q4, 55.8% in each of the two preceding periods and the average for this group of companies over the preceding 20 quarters (five years) of 59%.

Excluding the Energy sector drag, whose Q1 earnings are down -29.8%, total earnings for the rest of the index that have reported results would be up +6.8%.

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 be up +3.9% on +4.1% higher revenues. Excluding the Energy sector, Q1 earnings would be up +6.7% on +4.5% higher revenues.

For more details about the Q1 earnings season and evolving expectations for the coming periods, please check out our weekly Earnings Trends report here >>>Breaking Down Q1 Earnings Results  

Today's Featured Analyst Reports

Apple shares have lagged the broader market as well as the Tech sector this year, reflecting competitive pressurs and the uncertain China outlook. Growing legal complexities, including ongoing EPIC and Masimo lawsuits and the latest case by the U.S. Department of Justice, have been a headwind.

Unfavorable forex is expected to have hurt fiscal second-quarter revenues by 2% on a year-over-year basis. Nevertheless, the Services segment is expected to report strong results, driven by solid adoption of Apple TV+, Apple Pay and Apple Music. The updated MacBook and iMac lineup has helped Apple gain a share in the PC market.

The launch of Apple Vision Pro, a spatial computer that blends digital content with the physical world, has expanded Apple’s non-iPhone portfolio. The company’s strong cash balance and shareholder-friendly approach to dividends and share repurchase are noteworthy.

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

Shares of Walmart have modestly outperformed the Zacks Retail - Supermarkets industry over the past year (+21.0% vs. +20.2%). The company gaining from its highly diversified business with contributions from various segments, channels and formats. Walmart has been benefiting from an increase in in-store and digital channel traffic due to its robust omnichannel initiatives. Store-fulfilled delivery sales jumped 50% in the fourth quarter of fiscal 2024.

The strategic focus on enhancing delivery services has also been rewarding, as evidenced by the constant increase in the market share for groceries. Upsides like these, along with growth in the advertising business, fueled Walmart’s fourth-quarter results and led to an encouraging fiscal 2025 view.

However, the retail landscape continues to be dynamic due to challenges like inflation and volatile consumer spending. High SG&A expenses are also a concern.

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

Chevron shares have gained +3.5% over the past year against the Zacks Oil and Gas - Integrated - International industry’s gain of +9.4%. Despite the underperformance, the company is positioned as one of the top global integrated oil firms, set for sustainable production growth, particularly due to its dominant position in the lucrative Permian Basin. Further, the recent acquisition of Hess Corporation is expected to significantly strengthen Chevron's presence in oil-rich Guyana.

However, the company is grappling with lower prices in the upstream segment and declining refining margins in the downstream unit. Another concern is the sub-100% reserve replacement ratio, indicating challenges in replenishing produced energy. Considering all these factors, investors are advised to wait for a better entry point.

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

Other noteworthy reports we are featuring today include Aon plc (AON), Carrier Global Corporation (CARR) and American Water Works Company, Inc. (AWK).

Director of Research

Sheraz Mian

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>>>