For Immediate Release
Chicago, IL – November 15, 2021 – Zacks.com releases the list of companies likely to issue earnings surprises. This week’s list includes Walmart Inc. (
WMT Quick Quote WMT - Free Report) , Target Corporation ( TGT Quick Quote TGT - Free Report) , NVIDIA Corporation ( NVDA Quick Quote NVDA - Free Report) . What's Going On with Earnings in Q4 and Beyond?
Earnings and revenue growth has come down in the ongoing Q3 earnings season from the first-half’s breakneck speed, but it is still very high.
The unfavorable comparison to the first half of the year isn’t only with respect to the growth rates -- the proportion of these companies beating EPS and revenue estimates is also tracking below what we had seen from this same group of companies earlier in the year.
The decelerated growth pace notwithstanding, aggregate Q3 earnings for the S&P 500 index are on track to reach a new all-time quarterly record, surpassing the record set in the preceding quarter.
The one notable disconcerting development this earnings season is on the revisions front, with estimates for the current period (2021 Q4) modestly turning down in recent days after inching up at the start of the reporting cycle.
This is in contrast to the persistent positive revisions trend that we have been seeing since the Summer of 2020. While the magnitude of negative revisions to Q4 estimates is fairly modest in the aggregate, it is relatively more pronounced for the Retail and Transportation sectors.
Partly offsetting these estimate cuts are rising estimates for the Energy sector that have been steadily going up lately.
Even as estimates for 2021 Q4 have modestly come down they continue to move up for next year, though the pace of revisions has moderated and a number of sectors are starting to see estimates come down.
Earnings estimates for full-year 2022 have gone up +14% since January 2020, +4% since June 2021 and +0.5% since the start of October.
The +0.5% increase in aggregate 2022 earnings estimates for the S&P 500 since the start of October hides opposing cross currents ‘under the hood’, with positive revisions for the Energy and Auto sectors offsetting negative estimate revisions of varying magnitudes for most of the other sectors.
It will be interesting to see how these revisions trends evolve as we move into the Q3 reporting cycle for the Retail sector whose members will start coming out with results this week.
Macro trends related to supply chain problems and input cost inflation, including labor, have become notable headwinds for some of these industries. The Retail space is particularly vulnerable to these negative trends.
Q3 Earnings Season Scorecard
Including all the results that came out through Friday, November 12
th, we now have Q3 results from 460 S&P 500 members or 92% of the index’s total membership. Total earnings (or aggregate net income) for these companies are up +43.1% from the same period last year on +18.6% higher revenues, with 79.3% beating EPS estimates and 74.3% beating revenue estimates. The proportion of these companies beating both EPS and revenue estimates is 62.1%. This Week’s Key Earnings Reports
This week brings Q3 results from more than 300 companies, including 14 S&P 500 members. The notable index members reporting results this week include
Walmart, Target, Nvidia and others.
Walmart will report Q3 results before the market’s open on Tuesday, November 16
th. Walmart is expected to earn $1.39 per share on $135.3 billion in revenues, which represent year-over-year growth rates of +3.7% and +0.4%, respectively.
Walmart shares have lagged the broader market and Target in the year-to-date period, with the stock up only +3% vs. the S&P 500 index’s +25% gain and Target’s +47.9% rise.
While both big-box operators are negatively exposed to macro trends related to supply chain bottlenecks and labor shortages, the market appears to be giving a lot more credit to Target for its digital efforts.
Target reports Q3 results before the market’s open on Wednesday, November 17
th, while Nvidia will come out with quarterly results after the market’s close on Wednesday, November 17 th.
Nvidia shares are literally on fire, with the stock up +133.7% in the year-to-date period, handily outperforming the Zacks Tech sector’s +25.9% gain and the Zacks Semiconductor industry’s +45.3% rise.
Nvidia is expected to bring in $1.11 per share in earnings on $6.83 billion in revenues, up +52.1% and +44.5% from the year-earlier level, respectively. The stock was up following the last quarterly release on August 18
th, which followed two back-to-back quarterly releases that had weighed on the stock price immediately after the release.
With Nvidia shares up more than +60% since the last quarterly report on August 18
th, it may be very hard to please the market with this earnings report. Expectations for Q3 & Beyond
Looking at the quarter as a whole, combining the actual results that have come out with estimates for the still-to-come companies, total Q3 earnings for the S&P 500 index are expected to be up +39.7% from the same period last year on +16.9% higher revenues.
For a detailed look at the overall earnings picture, including expectations for the coming periods, please check out our weekly Earnings Trends report
>>>> Making Sense of the Evolving Earnings Picture
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