The fourth-quarter 2021 earnings season is in full swing with corporate bigwigs of different sectors and industries of the economy releasing their financial numbers. Wall Street has seen a good start to this reporting cycle so far. Although the majority of the companies are yet to release their data, the results are better than expected.
Next week, the earnings season will gather pace as several corporate behemoths are slated to report their financial numbers. Five of them —
Alphabet Inc. ( GOOGL Quick Quote GOOGL - Free Report) , Gilead Sciences Inc. ( GILD Quick Quote GILD - Free Report) , United Parcel Service Inc. ( UPS Quick Quote UPS - Free Report) , Thermo Fisher Scientific Inc. ( TMO Quick Quote TMO - Free Report) and Meta Platforms Inc. ( FB Quick Quote FB - Free Report) — are set to beat on earnings results. Solid Start to Fourth-Quarter Earnings
As of Jan 26, 101 S&P 500 companies reported fourth-quarter 2021 results. Total earnings of these companies are up 25.5% year over year on 13.2% higher revenues with 84.2% beating EPS estimates and 77.2% surpassing revenue estimates.
Total fourth-quarter earnings of the market's benchmark — the S&P 500 Index — are projected to climb 22.1% from the same period last year on 12.2% higher revenues, following 41.4% year-over-year earnings growth on 17.4% higher revenues in the third quarter, 95% year-over-year earnings growth on 25.3% higher revenues in the second quarter and 49.3% year-over-year earnings growth on 10.3% higher revenues in first-quarter 2021.
The first three quarters of last year were favorably impacted since the preceding quarters of the year before that were affected by pandemic-induced lockdowns and restrictions. However, the U.S. economy started reopening at a slow pace since the beginning of the fourth quarter of 2020.
Q4 2021 At a Glance
The U.S. economy continued to witness a strong recovery from the pandemic-led havoc in the fourth quarter. Nationwide deployment of COVID-19 vaccines on a priority basis, massive fiscal stimulus and continuation of easy money policies by the Fed resulted in a faster-than-expected reopening of the economy.
Strong pent-up demand supported by record-high personal savings, labor shortage and supply-chain disruptions resulted in a spike in inflation. Although the Fed initially considered the ongoing inflation to be transitory, it did recognize in its December FOMC meeting that inflation is no longer transitory and needs harsh measures to contain it.
The rapid spread of the highly infectious Delta and Omicron variants of the coronavirus also disrupted normal economic activities to some extent. Despite this, the U.S. economy grew at an impressive 6.9% last quarter.
Stocks in Focus
Five corporate behemoths will report fourth-quarter 2021 earnings results next week. Each of these stocks carries a Zacks Rank #3 (Hold) and has a positive
Earnings ESP. You can see . the complete list of today’s Zacks #1 Rank stocks here
Our research shows that for stocks with the combination of a Zacks Rank #3 or better and a positive Earnings ESP, the chance of an earnings beat is as high as 70%. These stocks are anticipated to appreciate after their earnings releases. You can uncover the best stocks to buy or sell before they’re reported with our
Earnings ESP Filter.
The chart below shows the price performance of five above-mentioned stocks in the last quarter.
Image Source: Zacks Investment Research United Parcel Service is expected to see upbeat demand for e-commerce-related package deliveries to aid its fourth-quarter 2021 results. We are also appreciative of UPS' efforts to reward its shareholders. In the first nine months of 2021, United Parcel Service paid out dividends worth $2.6 billion.
Robust free cash-flow generation by the company supports its shareholder-friendly activities. In August, UPS' board approved a new share buyback program worth $5 billion, replacing its existing $2.1-billion program. We are also impressed with its environmental-friendly approach.
United Parcel Service has an Earnings ESP of +1%. It has an expected earnings growth rate of 2.5% for the current year. The Zacks Consensus Estimate for current-year earnings improved 0.2% over the last 30 days.
UPS recorded earnings surprises in the last four reported quarters, with an average beat of 27.7%. United Parcel Service is set to release
earnings results on Feb 1, before the opening bell. Alphabet has been strongly emphasizing AI techniques and the home automation space, which should aid business growth over the long term. Solid momentum across search, advertising, cloud and YouTube businesses aided the results of Alphabet. Further, the growing proliferation of consumers’ online activities and rising advertiser spending remained as tailwinds.
Alphabet's robust cloud division continues to be the key catalyst. Expanding data centers will continue to bolster its presence in the cloud space. Further, major updates in its search segment are enhancing the search results. Moreover, GOOGL’s mobile search is constantly gaining traction.
Alphabet has an Earnings ESP of +2.11%. It has an expected earnings growth rate of 4.6% for the current year. GOOGL recorded earnings surprises in the last four reported quarters, with an average beat of 41.5%. Alphabet is set to release
earnings results on Feb 1, after the closing bell. Gilead Sciences has performed impressively in 2021 driven by increased contribution from the COVID-19 treatment, Veklury (remdesivir). However, sales of other drugs were disappointing as the base business continues to be affected by the pandemic. Nevertheless, flagship HIV therapy Biktarvy of GILD continues to register growth in market share.
Gilead Sciences is looking to solidify its oncology franchise, which holds potential. The acquisition of Immunomedics added an approved drug Trodelvy to GILD’s portfolio and the label expansion of the drug should boost sales.
Gilead Sciences has an Earnings ESP of +2.02%. The Zacks Consensus Estimate for current-year earnings improved 0.9% over the last 7 days. GILD recorded earnings surprises in the last four reported quarters, with an average beat of 15.8%. Gilead Sciences is set to release
earnings results on Feb 1, after the closing bell. Thermo Fisher Scientific benefits from strong end-market growth driven by robust fundamentals in life sciences, strong economic activity globally and strong pandemic response. The underlying demand for Thermo Fisher’s product and service offerings used in the production and development of COVID-19 vaccines remained robust and TMO expects this demand to transition to non-COVID revenues.
Thermo Fisher is currently expanding its bioproduction purification resin capacity, which is used in the mRNA manufacturing process. In Biosciences business, TMO has launched several new products, including two instruments to advance cell analysis — the Invitrogen Bigfoot Spectral Sorter and the Invitrogen Attune CytPix Flow Cytometer.
Thermo Fisher has an Earnings ESP of +12.77%. The Zacks Consensus Estimate for current-year earnings improved 1.5% over the last 30 days. TMO recorded earnings surprises in the last four reported quarters, with an average beat of 9%. Thermo Fisher is set to release
earnings results on Feb 2, before the opening bell. Meta Platforms is benefiting from steady user growth across all regions, particularly Asia Pacific, as reflected by third-quarter 2021 results. Increased engagement for FB’s products like Instagram, WhatsApp, Messenger and Facebook Watch has been a major growth driver.
Advertising revenues of Meta Platforms are benefiting from the ongoing shift to e-commerce. FB’s focus on becoming a metaverse company is noteworthy. Meta Platforms’ strong balance sheet and cash flow generating ability is a key catalyst.
Meta Platforms has an Earnings ESP of +2.52%. The Zacks Consensus Estimate for current-year earnings improved 0.2% over the last 30 days. FB recorded earnings surprises in the last four reported quarters, with an average beat of 19.8%. Meta Platforms is set to release
earnings results on Feb 2, after the closing bell.
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