Back to top

Image: Bigstock

JPMorgan, Costco, Oracle, FedEx and Nike are part of Zacks Earnings Preview

Read MoreHide Full Article

For Immediate Release

Chicago, IL – June 21, 2021 – Zacks.com releases the list of companies likely to issue earnings surprises. This week’s list includes JPMorgan Chase & Co. (JPM - Free Report) , Costco Wholesale Corporation (COST - Free Report) , Oracle Corporation (ORCL - Free Report) , FedEx Corporation (FDX - Free Report) and NIKE, Inc. (NKE - Free Report) .

Making Sense of Q2 Earnings Season Expectations

Estimates have been steadily going up, as we have been consistently pointing out in our earnings commentary, though the favorable revisions trend has eased off in recent weeks.

Given how strong earnings surprises turned out to be in the preceding reporting cycle (2021 Q1), the final earnings growth tally for 2021 Q1 could be as high as +80%.

2021 earnings and revenues are expected to be up +35% and +10.5%, respectively, which follows the Covid-driven decline of -13.1% in 2020.

On an index ‘EPS’ basis, the 2021 expectation works out to $183.68, up from $136.04 per ‘Index share’ in 2020.

These full-year estimates have been going up as well.

Key Reports This Week

The Q2 reporting cycle will really get going July 13th, as JPMorgan and the other major banks come out with their fiscal June-quarter results. But we (and other data aggregators) count the start of this and other earnings season(s) a little differently. From our standpoint, the Q2 reporting cycle got underway with companies reporting results for their fiscal quarters ending in May.

We have already seen such May-quarter results from 5 S&P 500 members, including Costco and Oracle, with another 7 index members on deck to report results this week. FedEx and Nike are the notable reporters this week, both reporting after the market’s close on Thursday, June 24th.

We are off to a great start with the 5 S&P 500 members that have reported results already. Total earnings for these 5 companies are up +32.4% from the same period last year on +19.6% higher revenues, with all 5 companies beating EPS and revenue estimates.  

It is too early to draw any conclusions from this very small sample of results. But for what it’s worth, this is a better performance from these 5 index members than we have seen in the recent past.

Q2 Earnings Growth Isn’t Solely Because of Easy Comparisons

One unique aspect of all current economic and earnings data is the distortion caused by comparisons to last year’s numbers, when most economic and business activities came to a halt as a result of Covid-driven lockdowns. We saw this ‘base-year effect’ in the recent May inflation reading and other monthly readings related to housing starts, industrial production and even consumer spending.

With respect to corporate earnings, this ‘effect’ was in play to some extent in the March-quarter earnings season as well, but will be most pronounced in the coming Q2 earnings season that will really get underway in a few weeks.

Earnings growth was very strong in 2021 Q1 and is expected to be even stronger in the Q2 reporting cycle, with comparisons to the comparable Covid-depressed periods of 2020 a major source of the growth.

We should keep in mind, however, that the strong earnings growth we saw in Q1 and the even stronger growth expected in Q2 is also reflective of genuine growth in the absolute sense, not just a result of easy comparisons.

These are quarterly earnings totals, with aggregate bottom-up earnings estimates for 2021 Q2 and the following three quarters and actual results for the preceding 8 quarters. We have highlighted 2021 Q2, 2020 Q2 and 2019 Q2 to make the point about comparisons.

You can see that 2021 Q2 earnings for the S&P 500 index are expected to be up +60.7% from the Covid-hit 2020 Q2 period. But even relative to the pre-Covid 2019 Q2 period, 2021 Q2 earnings are expected to be up +8.9%.

In fact, 9 of the 16 Zacks sectors are expected to earn more in 2021 Q2 than they did in the pre-Covid 2019 Q2 period. These sectors include Basic Materials (+74.1% higher earnings relative to the 2019 period), Construction (+56.9%), Technology (+31.7%), Retail (+24.7%), and Medical (+20.9%). Even the Finance sector is expected to have +5.4% higher earnings in 2021 Q2 relative to Q2 2019.

Transportation, Consumer Discretionary, Energy, Aerospace and Autos are some of the major sectors that are expected to earn significantly less than what they earned in the comparable 2019 period.

The bottom line is that while comparisons to the Covid-affected 2019 period is no doubt giving us the outsized growth pace in 2021 Q2 (+60.1%), growth would still be positive without such a base-year effect.

For a detailed look at the overall earnings picture, including expectations for the coming periods, please check out our weekly Earnings Trends report >>>> What Will Q2 Earnings Season Show

Zacks Names “Single Best Pick to Double"

From thousands of stocks, 5 Zacks experts each have chosen their favorite to skyrocket +100% or more in months to come. From those 5, Director of Research Sheraz Mian hand-picks one to have the most explosive upside of all.

You know this company from its past glory days, but few would expect that it’s poised for a monster turnaround. Fresh from a successful repositioning and flush with A-list celeb endorsements, it could rival or surpass other recent Zacks’ Stocks Set to Double like Boston Beer Company which shot up +143.0% in a little more than 9 months and Nvidia which boomed +175.9% in one year.

Free: See Our Top Stock and 4 Runners Up >>

 

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.