We use cookies to understand how you use our site and to improve your experience.
This includes personalizing content and advertising.
By pressing "Accept All" or closing out of this banner, you consent to the use of all cookies and similar technologies and the sharing of information they collect with third parties.
You can reject marketing cookies by pressing "Deny Optional," but we still use essential, performance, and functional cookies.
In addition, whether you "Accept All," Deny Optional," click the X or otherwise continue to use the site, you accept our Privacy Policy and Terms of Service, revised from time to time.
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 and Amazon
Read MoreHide Full Article
For Immediate Release
Chicago, IL – December 16, 2021 – Zacks Director of Research Sheraz Mian says, “We remain positive in our earnings outlook, as we see the overall growth picture steadily improving, as the near-term logistical issues get addressed."
Making Sense of Evolving Earnings Estimates
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>>>
The market has been focused on the rising cost of inputs and labor and other supply chain issues for the last few months. There was tangible nervousness on Wall Street ahead of the start of the Q3 earnings season that these headwinds would start weighing on corporate profits through compressed margins.
We saw some of that in the Q3 reporting cycle, with a number of companies struggling to effectively deal with higher input and labor costs. Even mighty Apple (AAPL - Free Report) and Amazon (AMZN - Free Report) came up short in their quarterly reports as a result of these developments. But many other companies have been able to pass on higher costs to the end consumer.
Higher expenses prompted Amazon to cut 2021 Q4 guidance, with the company outlining $6 billion in incremental higher outlays, of which $2 billion was on account of labor cost inflation. Supply-chain issues were behind Apple’s revenue miss, with logistical challenges shaving an estimated $6 billion from the company’s Q3 top line.
While these unfavorable cost trends may not have had as much negative impact on earnings as many had feared ahead of the start of the Q3 reporting cycle, they still remain a risk to long-term earnings trends. In fact, a number of sectors where the margin cushion is already fairly thin, struggled with these trends.
A notable sector suffering such a margin squeeze in the Q3 reporting cycle was Consumer Staples whose Q3 earnings growth of +4.4% on +11.8% higher revenues included a 100 basis-points net margin contraction. The Utilities, Autos, Retail and Construction sectors suffered margin squeezes as well, though relatively less pronounced compared to Consumer Staples.
Net margins for the index as a whole are expected to expand 81 basis points in 2021 Q4, though they are expected to be below the year-earlier level for 6 of the 16 Zacks sectors. These include Consumer Staples, Utilities, Industrials, Retail, Autos and Technology.
These margin pressures have been a contributing factor to the recent negative shift in the revisions trend, which consistently remained positive since July 2020.
We remain positive in our earnings outlook, as we see the overall growth picture steadily improving, as the near-term logistical issues get addressed.
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 and Amazon
For Immediate Release
Chicago, IL – December 16, 2021 – Zacks Director of Research Sheraz Mian says, “We remain positive in our earnings outlook, as we see the overall growth picture steadily improving, as the near-term logistical issues get addressed."
Making Sense of Evolving Earnings Estimates
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>>>
The market has been focused on the rising cost of inputs and labor and other supply chain issues for the last few months. There was tangible nervousness on Wall Street ahead of the start of the Q3 earnings season that these headwinds would start weighing on corporate profits through compressed margins.
We saw some of that in the Q3 reporting cycle, with a number of companies struggling to effectively deal with higher input and labor costs. Even mighty Apple (AAPL - Free Report) and Amazon (AMZN - Free Report) came up short in their quarterly reports as a result of these developments. But many other companies have been able to pass on higher costs to the end consumer.
Higher expenses prompted Amazon to cut 2021 Q4 guidance, with the company outlining $6 billion in incremental higher outlays, of which $2 billion was on account of labor cost inflation. Supply-chain issues were behind Apple’s revenue miss, with logistical challenges shaving an estimated $6 billion from the company’s Q3 top line.
While these unfavorable cost trends may not have had as much negative impact on earnings as many had feared ahead of the start of the Q3 reporting cycle, they still remain a risk to long-term earnings trends. In fact, a number of sectors where the margin cushion is already fairly thin, struggled with these trends.
A notable sector suffering such a margin squeeze in the Q3 reporting cycle was Consumer Staples whose Q3 earnings growth of +4.4% on +11.8% higher revenues included a 100 basis-points net margin contraction. The Utilities, Autos, Retail and Construction sectors suffered margin squeezes as well, though relatively less pronounced compared to Consumer Staples.
Net margins for the index as a whole are expected to expand 81 basis points in 2021 Q4, though they are expected to be below the year-earlier level for 6 of the 16 Zacks sectors. These include Consumer Staples, Utilities, Industrials, Retail, Autos and Technology.
These margin pressures have been a contributing factor to the recent negative shift in the revisions trend, which consistently remained positive since July 2020.
We remain positive in our earnings outlook, as we see the overall growth picture steadily improving, as the near-term logistical issues get addressed.
Follow us on Twitter: https://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.