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Walmart, Applied Materials, Deere & Co, Shopify and Boeing are part of Zacks Earnings Preview

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For Immediate Release

Chicago, IL – February 16, 2021 – Zacks.com releases the list of companies likely to issue earnings surprises. This week’s list includes Walmart Inc. (WMT - Free Report) , Applied Materials, Inc. (AMAT - Free Report) , Deere & Company (DE - Free Report) , Shopify Inc. (SHOP - Free Report) and The Boeing Company (BA - Free Report) .

Earnings Estimates Keep Going Up

Earnings growth was expected to resume in the first quarter of 2021 after the pandemic-driven declines of 2020. But positive growth has arrived a little earlier, with earnings in the ongoing Q4 earnings season now modestly above the year-earlier period.

To give you a sense of how much the Q4 growth pace has changed in recent weeks and how good the reporting cycle has turned out to be, the consensus estimate for Q4 was for a decline of -11.2% in mid-December 2020.

Earnings Season Scorecard (as of Friday, February 12th)

Three quarters of the Q4 earnings season is now behind us, at least for the large cap S&P 500 index (372 companies have reported already). Please note that these 372 index members collectively account for 83.6% of the index's total market capitalization. As such, the results already represent a true cross section of the index as a whole and of the overall earnings picture.

The reporting cycle starts decelerating from this week onwards, with more than 350 companies on deck to report Q4 results, including 48 S&P 500 members. We will start seeing from the traditional brick-and-mortar retail space this week, with Walmart kicking off the reporting cycle for the group. Other notable companies on deck to report results this week include Applied Materials, Deere & Co., Shopify and others.

Total Q4 earnings (or aggregate net income) for these 372 companies are up +4.6% from the same period last year on+2.9% higher revenues, with 80.4% beating EPS estimates and 77.7% beating revenue estimates.

Not only are a historically high proportion of the reporting companies beating consensus EPS and revenue estimates, but they are also providing positive and reassuring guidance that is helping sustain the positive revisions trend that has been in place since July 2020.

This positive revisions trend appears to have gained pace and momentum over the last few weeks. We expect this trend to remain in place as we move towards the finish line in the Q4 earnings season. As indicated earlier, we have more than 350 companies on deck to report results this week, including 48 S&P members.

A number of sectors standout in coming out with impressive results, with Technology and Finance particularly notable. Results from the Construction and Basic Materials sectors are also very strong.

For the Technology sector, we now have Q4 results from 86.9% of the sector's total market cap in the index. Total earnings for these Tech companies are up +21.3% from the same period last year on +14.8% higher revenues, with 86.8% beating EPS estimates and 83% beating revenue estimates.

The Overall Earnings Picture

Looking at Q4 as a whole, combining the actual results from 372 index members with estimates for the still-to-come companies, total earnings are now expected to up +2.9% on +2.6% higher revenues. This positive growth follows three back-to-back quarters of declines for S&P 500 earnings.

Sectors with the weakest growth remain the same ones that struggled in the first three quarters of the year, including Transportation (-91.7% earnings decline), Energy (-94.1%), and Consumer Discretionary (-61.8%). Q4 earnings for the Aerospace sector are now expected to be down -137.4%, largely reflecting Boeing's weak quarterly release.

On the positive side, Q4 earnings are expected to be up +167.9% at Autos, +40.1% at Construction, +22.7% at Basic Materials, +15.8% at Finance, +19.8% at Technology, +14.5% at Medical and +10.5% at the Retail sector.

Excluding Finance's help, Q4 earnings for the rest of the S&P 500 index would be down -0.4%, instead of up +2.9% as a whole. Q4 Earnings decline at the rate of -3.8%, instead of up +2.9% once Technology's strong showing is excluded.

Growth is expected to resume this year, with full-year 2021 earnings for the S&P 500 index currently expected to be up +27.6% relative to 2020 estimates. On an index 'EPS' basis, this works out to $166.88, up from $130.74 in 2020 and $156.68 in 2019.

Estimates for 2021 have been steadily going up over the last six months.

As we saw earlier with positive revisions to 2021 Q1 estimates, the revisions trend appears to have gained pace in recent weeks. That said, we strongly feel that there is significant room for further positive revisions as the overall macro backdrop stabilizes and gets clearer, particularly in the second half of the year.

For an in-depth look at the overall earnings picture and expectations for the coming quarters, please check out our weekly Earnings Trends report >>>> A Very Strong Earnings Picture

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