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Apple, Amazon, Snap, Twitter, Microsoft and Facebook are part of Zacks Earnings Preview
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For Immediate Release
Chicago, IL – July 26, 2021 – Zacks.com releases the list of companies likely to issue earnings surprises. This week’s list includes Apple Inc. (AAPL - Free Report) , Amazon.com, Inc. (AMZN - Free Report) , Snap Inc. (SNAP - Free Report) , Twitter, Inc. , Microsoft Corporation (MSFT - Free Report) and Facebook, Inc. .
Big Tech Earnings Preview: Apple, Amazon and Other Market Movers
Technology stocks have been less than stellar performers this year, with a number of last year’s leaders struggling to find traction in an environment that made the previously shunned cyclical/value stocks more attractive.
As you can see above, Apple and Amazon are clearly the laggards this year, with Alphabet and Facebook really standing out. The explanation for the Alphabet and Facebook outperformance likely has to do with these operators’ leverage to advertising spending, which was also apparent in the Snap and Twitter results that further boosted these stocks.
Microsoft has become a unique Tech player that enjoys multiple growth engines, from enterprise software to cloud leadership and many other things.
Apple and Amazon shares have undoubtedly perked up a bit lately, but nevertheless, remain laggards. It appears the market sees these two leaders’ pandemic outperformance being at the expense of future periods. This view likely explains why the market effectively shrugged standout results from both these players back in April. It will be interesting to see if this week’s quarterly results will help change sentiment on these two stocks.
These five companies combined now account for 23.3% of the total market capitalization of the S&P 500 index, second only to the Technology sector’s weight in the index at 32.5% and above the other 15 sectors, including Finance at 13.4% (Finance’s weight increased from 12.1% in October last year).
When some people refer to these companies as ‘defensive’ Tech, they are essentially referring to this earnings power that has visibility and stability. The only somewhat negative spin that one could put on these otherwise impressive numbers for the growth is the expected deceleration in the coming periods.
Beyond the big 5 Tech players, total Q2 earnings for the Technology sector as a whole are expected to be up +37.3% from the same period last year on +19.5% higher revenues.
This big picture view of the ‘Big 5’ players as well as the sector as whole shows that current estimates for the coming periods reflect a decelerating growth trend.
Microsoft, Alphabet and Apple will report after the market’s close on Tuesday this week (7/27), while Facebook will report after the market’s close on Wednesday (7/28) and Amazon on Thursday (7/29).
In all, this week brings results from more than 820 companies in total, including 176 S&P 500 members or more than a third of the index’s total membership.
Q2 Earnings Season Scorecard
We now have Q2 results from 120 S&P 500 members or 24% of the index’s total membership. With another 176 index members on deck to report Q2 results this week, we will have seen results from more than 59% of the index’s total membership by the end of this week.
Total earnings (or aggregate net income) for these 120 companies are up +118.9% from the same period last year on +18.4% lower revenues, with 89.2% beating EPS estimates and a record 85% beating revenue estimates.
The growth comparison is likely not fair, given the unusually high year-over-year growth rates in the Finance sector, a function of big reserve releases and easy comparisons in 2021 Q2. Earnings growth for the remaining companies that have reported drops to only +68.8%. This shows you the power of easy comps, as the year-earlier period was literally battered by the Covid-driven lockdowns and other business disruptions.
These are impressive numbers, any way you look at them. The momentum on the revenue front is notably striking, both in terms of the growth rate as well as the beats percentages.
This is a significantly better performance than we have seen from these banks in recent quarters.
What is Expected for 2021 Q2 & Beyond?
Looking at Q2 on a blended basis, combining the results that have come out with estimates for the still-to-come companies, total earnings for the S&P 500 index are currently expected to be up +74.3% from the same period last year on +20% higher revenues, with the growth rate steadily going up as companies come out with better-than-expected results. This would follow the +49.3% earnings growth on +10.3% higher revenues in 2021 Q1.
A big part of the unusually strong earnings growth expected in the Q2 earnings season is due to easy comparisons to last year’s Covid-hit period. But as we have been consistently pointing out, not all of the growth is a result of easy comparisons.
Given how strong earnings surprises turned out to be in the preceding reporting cycle (2021 Q1) and the numbers out already, the final earnings growth tally for 2021 Q2 could be easily north of +80%.
2021 Q2 at $425 billion is +69% above the Covid-hit $243.8 billion tally achieved in 2020 Q2.
Please note the double-digit earnings growth expected in each of the next two years. This suggests that the market isn’t looking for a one-off rebound this year, but rather an enduring growth cycle that continues over the next couple of years.
To the extent that this growth outlook can improve as we move into the back half of 2021 will determine whether the overall earnings picture is getting better or leveling off.
For a detailed look at the overall earnings picture, including expectations for the coming periods, please check out our weekly Earnings Trends report >>>>All-Around Earnings Strength
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.
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Apple, Amazon, Snap, Twitter, Microsoft and Facebook are part of Zacks Earnings Preview
For Immediate Release
Chicago, IL – July 26, 2021 – Zacks.com releases the list of companies likely to issue earnings surprises. This week’s list includes Apple Inc. (AAPL - Free Report) , Amazon.com, Inc. (AMZN - Free Report) , Snap Inc. (SNAP - Free Report) , Twitter, Inc. , Microsoft Corporation (MSFT - Free Report) and Facebook, Inc. .
Big Tech Earnings Preview: Apple, Amazon and Other Market Movers
Technology stocks have been less than stellar performers this year, with a number of last year’s leaders struggling to find traction in an environment that made the previously shunned cyclical/value stocks more attractive.
As you can see above, Apple and Amazon are clearly the laggards this year, with Alphabet and Facebook really standing out. The explanation for the Alphabet and Facebook outperformance likely has to do with these operators’ leverage to advertising spending, which was also apparent in the Snap and Twitter results that further boosted these stocks.
Microsoft has become a unique Tech player that enjoys multiple growth engines, from enterprise software to cloud leadership and many other things.
Apple and Amazon shares have undoubtedly perked up a bit lately, but nevertheless, remain laggards. It appears the market sees these two leaders’ pandemic outperformance being at the expense of future periods. This view likely explains why the market effectively shrugged standout results from both these players back in April. It will be interesting to see if this week’s quarterly results will help change sentiment on these two stocks.
These five companies combined now account for 23.3% of the total market capitalization of the S&P 500 index, second only to the Technology sector’s weight in the index at 32.5% and above the other 15 sectors, including Finance at 13.4% (Finance’s weight increased from 12.1% in October last year).
When some people refer to these companies as ‘defensive’ Tech, they are essentially referring to this earnings power that has visibility and stability. The only somewhat negative spin that one could put on these otherwise impressive numbers for the growth is the expected deceleration in the coming periods.
Beyond the big 5 Tech players, total Q2 earnings for the Technology sector as a whole are expected to be up +37.3% from the same period last year on +19.5% higher revenues.
This big picture view of the ‘Big 5’ players as well as the sector as whole shows that current estimates for the coming periods reflect a decelerating growth trend.
Microsoft, Alphabet and Apple will report after the market’s close on Tuesday this week (7/27), while Facebook will report after the market’s close on Wednesday (7/28) and Amazon on Thursday (7/29).
In all, this week brings results from more than 820 companies in total, including 176 S&P 500 members or more than a third of the index’s total membership.
Q2 Earnings Season Scorecard
We now have Q2 results from 120 S&P 500 members or 24% of the index’s total membership. With another 176 index members on deck to report Q2 results this week, we will have seen results from more than 59% of the index’s total membership by the end of this week.
Total earnings (or aggregate net income) for these 120 companies are up +118.9% from the same period last year on +18.4% lower revenues, with 89.2% beating EPS estimates and a record 85% beating revenue estimates.
The growth comparison is likely not fair, given the unusually high year-over-year growth rates in the Finance sector, a function of big reserve releases and easy comparisons in 2021 Q2. Earnings growth for the remaining companies that have reported drops to only +68.8%. This shows you the power of easy comps, as the year-earlier period was literally battered by the Covid-driven lockdowns and other business disruptions.
These are impressive numbers, any way you look at them. The momentum on the revenue front is notably striking, both in terms of the growth rate as well as the beats percentages.
This is a significantly better performance than we have seen from these banks in recent quarters.
What is Expected for 2021 Q2 & Beyond?
Looking at Q2 on a blended basis, combining the results that have come out with estimates for the still-to-come companies, total earnings for the S&P 500 index are currently expected to be up +74.3% from the same period last year on +20% higher revenues, with the growth rate steadily going up as companies come out with better-than-expected results. This would follow the +49.3% earnings growth on +10.3% higher revenues in 2021 Q1.
A big part of the unusually strong earnings growth expected in the Q2 earnings season is due to easy comparisons to last year’s Covid-hit period. But as we have been consistently pointing out, not all of the growth is a result of easy comparisons.
Given how strong earnings surprises turned out to be in the preceding reporting cycle (2021 Q1) and the numbers out already, the final earnings growth tally for 2021 Q2 could be easily north of +80%.
2021 Q2 at $425 billion is +69% above the Covid-hit $243.8 billion tally achieved in 2020 Q2.
Please note the double-digit earnings growth expected in each of the next two years. This suggests that the market isn’t looking for a one-off rebound this year, but rather an enduring growth cycle that continues over the next couple of years.
To the extent that this growth outlook can improve as we move into the back half of 2021 will determine whether the overall earnings picture is getting better or leveling off.
For a detailed look at the overall earnings picture, including expectations for the coming periods, please check out our weekly Earnings Trends report >>>>All-Around Earnings Strength
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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.