We use cookies to understand how you use our site and to improve your experience. This includes personalizing content and advertising. To learn more, click here. By continuing to use our site, you accept our use of cookies, revised Privacy Policy and Terms of Service.
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: Walmart, Target, AT&T and Microsoft
Read MoreHide Full Article
For Immediate Release
Chicago, IL – August 18, 2022 – Zacks Director of Research Sheraz Mian says, "Excluding the Energy sector, Q3 earnings are expected to be down -4.5% at present, a significant decline from +2.1% in the beginning of July."
Sectors Show Resilience as Earnings Estimates Slip
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>>>
Here are the key points:
· The +1.9% earnings growth expected for the S&P 500 index in 2022 Q3 is down from +7.2% at the start of the period. Excluding the Energy sector, Q3 earnings are expected to be down -4.5% at present, a significant decline from +2.1% in the beginning of July.
· Q3 estimates have been cut for 13 of the 16 Zacks sectors since the quarter got underway, with the biggest declines at the Consumer Discretionary, Consumer Staples, Technology, Retail and Conglomerates sectors.
· On the positive side, Q3 estimates have gone up the most for the Energy sector, but the revisions trend has been positive for the Auto and Utilities sectors as well.
The overall corporate profitability picture emerging from the Q2 earnings season, with over 90% of S&P 500 results out, continues to show stability and resilience in key earnings drivers like consumer and business spending.
While this stability and resilience run contrary to worries of an imminent economic slowdown or even a recession, we are starting to see tell-tale signs of emerging weakness in both consumer and business spending.
The market appreciated Walmart's (WMT - Free Report) results, but the favorable market reaction likely had more to do with fears created by its earlier pre-announcement. The inventory overhang at Walmart, Target (TGT - Free Report) and other retailers was mostly due to shifting consumer preferences. But part of the problem could be attributed to weakness in lower-income households as a result of inflationary pressures.
It makes intuitive sense for this consumer segment to be feeling some squeeze, as we heard from companies in a variety of industries, including AT&T (T - Free Report) . Other households seem to be doing just fine, as we heard from banks, credit card operators and beyond.
With respect to business spending, we have started seeing a squeeze on advertising budgets and hiring plans, but Microsoft (MSFT - Free Report) and others didn't see anything disconcerting with respect to spending on software and other services. That said, it is reasonable to expect some moderation in demand trends going forward as the full extent of the Fed's tightening cycle permeates through the broader economy.
A slowdown has gotten underway, but there is nothing in the earnings data, management commentary or guidance that would suggest the U.S. economy heading into a major economic downturn. That said, estimates have started coming down, with the overall revisions trend turning negative even after accounting for the persistent favorable revisions trend enjoyed by the Energy sector.
If we look at the evolution of Q3 earnings growth expectations on an ex-Energy basis, the expected growth rate has dropped from +2.1% on July 6th to -4.5% today.
Aggregate S&P 500 earnings outside of the Energy sector have declined -3.4% since mid-April, with double-digit percentage declines in Retail (down -14.6%) and Construction (-10.8%), and high single-digit percentage declines for the Tech (-9.7%), Industrial Products (-8.8%) and Consumer Discretionary (-7%).
The Overall Earnings Picture
Beyond Q2, the growth picture is expected to modestly improve.
As strong as the full-year 2022 earnings growth picture is expected to be, it's worth remembering that a big part of it is due to the unprecedented Energy sector momentum. Excluding the Energy sector, full-year 2022 earnings growth for the remainder of the index drops to a -0.1% decline.
There is a rising degree of uncertainty about the outlook, reflecting a lack of macroeconomic visibility in a backdrop of Fed monetary policy tightening. The evolving earnings revisions trend will reflect this macro backdrop.
Why Haven't You Looked at Zacks' Top Stocks?
Our 5 best-performing strategies have blown away the S&P's impressive +28.8% gain in 2021. Amazingly, they soared +40.3%, +48.2%, +67.6%, +94.4%, and +95.3%. Today you can access their live picks without cost or obligation.
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: Walmart, Target, AT&T and Microsoft
For Immediate Release
Chicago, IL – August 18, 2022 – Zacks Director of Research Sheraz Mian says, "Excluding the Energy sector, Q3 earnings are expected to be down -4.5% at present, a significant decline from +2.1% in the beginning of July."
Sectors Show Resilience as Earnings Estimates Slip
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>>>
Here are the key points:
· The +1.9% earnings growth expected for the S&P 500 index in 2022 Q3 is down from +7.2% at the start of the period. Excluding the Energy sector, Q3 earnings are expected to be down -4.5% at present, a significant decline from +2.1% in the beginning of July.
· Q3 estimates have been cut for 13 of the 16 Zacks sectors since the quarter got underway, with the biggest declines at the Consumer Discretionary, Consumer Staples, Technology, Retail and Conglomerates sectors.
· On the positive side, Q3 estimates have gone up the most for the Energy sector, but the revisions trend has been positive for the Auto and Utilities sectors as well.
The overall corporate profitability picture emerging from the Q2 earnings season, with over 90% of S&P 500 results out, continues to show stability and resilience in key earnings drivers like consumer and business spending.
While this stability and resilience run contrary to worries of an imminent economic slowdown or even a recession, we are starting to see tell-tale signs of emerging weakness in both consumer and business spending.
The market appreciated Walmart's (WMT - Free Report) results, but the favorable market reaction likely had more to do with fears created by its earlier pre-announcement. The inventory overhang at Walmart, Target (TGT - Free Report) and other retailers was mostly due to shifting consumer preferences. But part of the problem could be attributed to weakness in lower-income households as a result of inflationary pressures.
It makes intuitive sense for this consumer segment to be feeling some squeeze, as we heard from companies in a variety of industries, including AT&T (T - Free Report) . Other households seem to be doing just fine, as we heard from banks, credit card operators and beyond.
With respect to business spending, we have started seeing a squeeze on advertising budgets and hiring plans, but Microsoft (MSFT - Free Report) and others didn't see anything disconcerting with respect to spending on software and other services. That said, it is reasonable to expect some moderation in demand trends going forward as the full extent of the Fed's tightening cycle permeates through the broader economy.
A slowdown has gotten underway, but there is nothing in the earnings data, management commentary or guidance that would suggest the U.S. economy heading into a major economic downturn. That said, estimates have started coming down, with the overall revisions trend turning negative even after accounting for the persistent favorable revisions trend enjoyed by the Energy sector.
If we look at the evolution of Q3 earnings growth expectations on an ex-Energy basis, the expected growth rate has dropped from +2.1% on July 6th to -4.5% today.
Aggregate S&P 500 earnings outside of the Energy sector have declined -3.4% since mid-April, with double-digit percentage declines in Retail (down -14.6%) and Construction (-10.8%), and high single-digit percentage declines for the Tech (-9.7%), Industrial Products (-8.8%) and Consumer Discretionary (-7%).
The Overall Earnings Picture
Beyond Q2, the growth picture is expected to modestly improve.
As strong as the full-year 2022 earnings growth picture is expected to be, it's worth remembering that a big part of it is due to the unprecedented Energy sector momentum. Excluding the Energy sector, full-year 2022 earnings growth for the remainder of the index drops to a -0.1% decline.
There is a rising degree of uncertainty about the outlook, reflecting a lack of macroeconomic visibility in a backdrop of Fed monetary policy tightening. The evolving earnings revisions trend will reflect this macro backdrop.
Why Haven't You Looked at Zacks' Top Stocks?
Our 5 best-performing strategies have blown away the S&P's impressive +28.8% gain in 2021. Amazingly, they soared +40.3%, +48.2%, +67.6%, +94.4%, and +95.3%. Today you can access their live picks without cost or obligation.
See Stocks Free >>
Follow us on Twitter: https://twitter.com/zacksresearch
Join us on Facebook: https://www.facebook.com/ZacksInvestmentResearch/
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.