We use cookies to understand how you use our site and to improve your experience. This includes personalizing content and advertising. To learn more, click here. By continuing to use our site, you accept our use of cookies, revised Privacy Policy and Terms of Service.
You are being directed to ZacksTrade, a division of LBMZ Securities and licensed broker-dealer. ZacksTrade and Zacks.com are separate companies. The web link between the two companies is not a solicitation or offer to invest in a particular security or type of security. ZacksTrade does not endorse or adopt any particular investment strategy, any analyst opinion/rating/report or any approach to evaluating individual securities.
If you wish to go to ZacksTrade, click OK. If you do not, click Cancel.
Zacks Earnings Trends Highlights: Apple, Amazon, Google, Microsoft and Facebook
Read MoreHide Full Article
For Immediate Release
Chicago, IL – February 4, 2021 – Zacks Director of Research Sheraz Mian says, “Estimates for the current and coming quarters are steadily going up, as companies report Q4 results that are mostly better than expected. This is helping sustain the positive estimate revisions trend that has been in place since July 2020."
Tech Sector Displays Enormous Earnings Power
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:
Earnings growth for 2020 Q4 has turned modestly positive, following three-straight quarters of declines. The shift into positive territory for quarterly earnings growth in Q4 is thanks to impressive results from the Tech sector leaders.
Estimates for the current and coming quarters are steadily going up, as companies report Q4 results that are mostly better than expected. This is helping sustain the positive estimate revisions trend that has been in place since July 2020.
For the 223 S&P 500 companies that have reported Q4 results already, total earnings are up +2.5% from the same period last year on +1.5% higher revenues, with 80.3% beating EPS estimates and 78.0% beating revenue estimates. This is a notably better performance than we have seen from the same group of companies in the first three quarters of the year.
For the Tech sector, we now have Q4 results from 75.2% of the sector's market capitalization in the S&P 500 index. Total earnings for these Tech companies are up +21.6% on +12.6% higher revenues, with 93.3% beating EPS estimates and 90.0% beating revenue estimates.
The Tech sector's Q4 earnings performance represents a notable improvement over what we have been seeing in other recent periods.
Looking at Q4 as a whole, total earnings for the S&P 500 index are expected to be up +0.4% on +2.0% higher revenues, which would follow the -7.0% earnings decline in Q3 on -0.6% lower revenues.
Overall, 7 of the 16 Zacks sectors are expected to experience earnings declines in Q4, with Transportation (-91.8% decline), Energy (-94.8%), Consumer Discretionary (-73.5%) and Aerospace (-138.4%) as the big decliners.
For the Finance sector, Q4 earnings are now expected to be up +15.8% from the same period last year on -0.8% lower revenues, which would follow declines of -11.7% in 2020 Q3, - 45.3% in Q2, and -32.4% in Q1.
For the Technology sector, Q4 earnings are expected to be up +18.6% on +14.2% higher revenues, which would follow +12.9% earnings growth in Q3.
Other sectors with positive earnings growth in Q4 include Construction (+38.2% earnings growth), Autos (+66.3%), Medical (+11.1%), Basic Materials (23.0%), Medical (+11.1%) and Retail (+11.1%).
Looking at the calendar-year picture for the S&P 500 index, earnings are expected to decline -16.4% on -0.8% lower revenues in 2020 and increase +26.3% on +8.2% higher revenues in 2021. Estimates for both years have been going up.
The implied 'EPS' for the S&P 500 index, calculated using current 2020 P/E of 29.2X and index close, as of February 2nd, is $130.92, down from $156.61 in 2019. Using the same methodology, the index 'EPS' works out to $165.37 for 2021 (P/E of 23.1X) and $191.37 for 2022. The multiples have been calculated using the index's total market cap and aggregate bottom-up earnings for each year.
For the small-cap S&P 600 index, Q4 earnings are projected to fall -10.9% on -2.4% lower revenues. This would follow the -5.5% decline on -4.9% lower revenues in Q3.
For full-year 2020, the S&P 600 index is expected to experience a -29.2% decline in earnings on -10.4% lower revenues, with easy comps pushing earnings growth to +40.6% in 2021.
The market's rebound from the post-Covid lows was initially heavily concentrated in the Tech sector, particularly the handful of big technology operators. The rally has since expanded to other spaces beyond the Tech sector. But the leadership position of the major Tech players was put in the spotlight recently as a result of their impressive Q4 results.
The top 5 technology players – Apple (AAPL - Free Report) , Amazon (AMZN - Free Report) , Alphabet (GOOGL - Free Report) , Microsoft (MSFT - Free Report) and Facebook – collectively now account for 22.7% of the S&P 500 index's market capitalization, significantly above the Finance sector's current 12.6% weightage.
These big technology players are enormously profitable. Take for example, Alphabet and Amazon that reported this week. Amazon's Q4 earnings more than doubled to $7.2 billion on +43.6% jump in revenues to $125.5 billion. Alphabet's Q4 earnings increased +42.7% on +23.6% higher revenues. For this group of 5 big technology players, Q4 earnings increased +41.2% on +10.9% stronger revenues, with these 5 companies bringing in 21.4% of all S&P 500 earnings for the quarter.
Beyond these top 5 companies, total Q4 earnings for the 75.2% of the Tech sector's total market capitalization in the S&P 500 index that have reported results are up +21.6% from the same period last year on +12.6% higher revenues, with an impressive 93.3% beating EPS estimates and 90% beating revenue estimates. This is a notably stronger showing relative to what we have been seeing from the sector in other recent periods.
As we have consistently been pointing out since the start of this reporting cycle, the tone and substance of management guidance remains positive and reassuring. This is helping estimates for the current period (2021 Q1) climb.
Estimates for full-year 2021 have gone up as well, but we see a significant acceleration in the favorable revisions trend in the coming months on the back of a stronger-than-expected rebound in consumer and business spending as the ongoing vaccination effort gains pace. We strongly feel that current consensus estimates for 2021 GDP and earnings growth understate the full extent of the rebound.
We remain positive in our earnings outlook, as we see the full-year 2021 growth picture steadily improving through the first half of the year as more of the population gets vaccinated.
We strongly feel that current consensus economic growth projections reflect learned experiences of economic recoveries from the last few recessions. We don't think that this recovery will follow this past pattern as this downturn was fundamentally different, as its epicenter was medical and not financial. As such, we see significant upside to current consensus GDP growth estimates for 2021, which drives our favorable earnings outlook for the year and beyond.
The flow of recent economic readings about the labor market, factory space and even retail sales suggest that activity levels have moderated in response to the ongoing surge in infections. But with the extraordinary vaccination effort already underway, it is reasonable to expect the pandemic to get more under control towards the end of the first quarter of 2021.
As such, while growth in the current period (2020 Q4) will likely remain under pressure, we should expect the outlook to steadily improve. Beyond the Q4 earnings season, the outlook remains positive.
Just Released: Zacks' 7 Best Stocks for Today
Experts extracted 7 stocks from the list of 220 Zacks Rank #1 Strong Buys that have beaten the market more than 2X over with a stunning average gain of +24.9% per year.
These 7 were selected because of their superior potential for immediate breakout.
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 https://www.zacks.com/performance for information about the performance numbers displayed in this press release.
See More Zacks Research for These Tickers
Normally $25 each - click below to receive one report FREE:
Image: Bigstock
Zacks Earnings Trends Highlights: Apple, Amazon, Google, Microsoft and Facebook
For Immediate Release
Chicago, IL – February 4, 2021 – Zacks Director of Research Sheraz Mian says, “Estimates for the current and coming quarters are steadily going up, as companies report Q4 results that are mostly better than expected. This is helping sustain the positive estimate revisions trend that has been in place since July 2020."
Tech Sector Displays Enormous Earnings Power
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:
The market's rebound from the post-Covid lows was initially heavily concentrated in the Tech sector, particularly the handful of big technology operators. The rally has since expanded to other spaces beyond the Tech sector. But the leadership position of the major Tech players was put in the spotlight recently as a result of their impressive Q4 results.
The top 5 technology players – Apple (AAPL - Free Report) , Amazon (AMZN - Free Report) , Alphabet (GOOGL - Free Report) , Microsoft (MSFT - Free Report) and Facebook – collectively now account for 22.7% of the S&P 500 index's market capitalization, significantly above the Finance sector's current 12.6% weightage.
These big technology players are enormously profitable. Take for example, Alphabet and Amazon that reported this week. Amazon's Q4 earnings more than doubled to $7.2 billion on +43.6% jump in revenues to $125.5 billion. Alphabet's Q4 earnings increased +42.7% on +23.6% higher revenues. For this group of 5 big technology players, Q4 earnings increased +41.2% on +10.9% stronger revenues, with these 5 companies bringing in 21.4% of all S&P 500 earnings for the quarter.
Beyond these top 5 companies, total Q4 earnings for the 75.2% of the Tech sector's total market capitalization in the S&P 500 index that have reported results are up +21.6% from the same period last year on +12.6% higher revenues, with an impressive 93.3% beating EPS estimates and 90% beating revenue estimates. This is a notably stronger showing relative to what we have been seeing from the sector in other recent periods.
As we have consistently been pointing out since the start of this reporting cycle, the tone and substance of management guidance remains positive and reassuring. This is helping estimates for the current period (2021 Q1) climb.
Estimates for full-year 2021 have gone up as well, but we see a significant acceleration in the favorable revisions trend in the coming months on the back of a stronger-than-expected rebound in consumer and business spending as the ongoing vaccination effort gains pace. We strongly feel that current consensus estimates for 2021 GDP and earnings growth understate the full extent of the rebound.
We remain positive in our earnings outlook, as we see the full-year 2021 growth picture steadily improving through the first half of the year as more of the population gets vaccinated.
We strongly feel that current consensus economic growth projections reflect learned experiences of economic recoveries from the last few recessions. We don't think that this recovery will follow this past pattern as this downturn was fundamentally different, as its epicenter was medical and not financial. As such, we see significant upside to current consensus GDP growth estimates for 2021, which drives our favorable earnings outlook for the year and beyond.
The flow of recent economic readings about the labor market, factory space and even retail sales suggest that activity levels have moderated in response to the ongoing surge in infections. But with the extraordinary vaccination effort already underway, it is reasonable to expect the pandemic to get more under control towards the end of the first quarter of 2021.
As such, while growth in the current period (2020 Q4) will likely remain under pressure, we should expect the outlook to steadily improve. Beyond the Q4 earnings season, the outlook remains positive.
Just Released: Zacks' 7 Best Stocks for Today
Experts extracted 7 stocks from the list of 220 Zacks Rank #1 Strong Buys that have beaten the market more than 2X over with a stunning average gain of +24.9% per year.
These 7 were selected because of their superior potential for immediate breakout.
See these time-sensitive tickers now >>
Follow us on Twitter: https://www.twitter.com/zacksresearch
Join us on Facebook: https://www.facebook.com/home.php#/pages/Zacks-Investment-Research/57553657748?ref=ts
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.
Media Contact
Zacks Investment Research
800-767-3771 ext. 9339
support@zacks.com
https://www.zacks.com
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 https://www.zacks.com/performance for information about the performance numbers displayed in this press release.