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FedEx, UPS, General Mills, Costco and Adobe are part of Zacks Earnings Preview
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For Immediate Release
Chicago, IL – September 19, 2022 – Zacks.com releases the list of companies likely to issue earnings surprises. This week’s list includes FedEx (FDX - Free Report) , UPS (UPS - Free Report) , General Mills (GIS - Free Report) , Costco (COST - Free Report) and Adobe (ADBE - Free Report) .
Reading Q3 Earnings Tea Leaves After the FedEx Bombshell
The FedEx pre-announcement has spooked the market as it feeds into the long-feared narrative of an impending negative turn in the economy.
FedEx, scheduled to report results on Thursday, September 22nd, came up short of its own targets as it faced fast-declining shipping demand in Asia and Europe, which the company sees as providing an early read on what to expect globally.
As we all know, FedEx is no ordinary economic actor, as its business literally touches every corner of the global economy. The shortfall in FedEx Ground, the unit that is tied closely to e-commerce deliveries in the U.S., has read-through implications for the U.S. consumer and operators in the digital economy. This is significant since the next few months of the year include the holiday shopping season.
As unsettling as FedEx’s bombshell is for our reading of the macro picture, we shouldn’t lose sight of the company’s operational and management challenges.
I see the withdrawal of the full-year guidance — that was initially put in place just three months back — by the new management team as more a comment on their grasp of the ground reality than the fast-shifting macro landscape. Needless to say that FedEx’s new management team is off to a terrible start in establishing its credibility with the market, particularly if UPS and others don’t validate their outlook.
FedEx’s company specific challenges notwithstanding, we know that the macroeconomic landscape is expected to be tougher. Europe is practically in a recession already and China has held itself down with its zero-Covid policy. The U.S. economy has been faring better, but everyone knows there is pain ahead. The Fed Chief ‘promised’ us that in his Jackson Hole speech.
The lagging effect of the extraordinary tightening already implemented and the incremental rate hikes ahead, including in next week’s Fed meeting, will at least slow down the economy — if not push us into a recession, as many have started to fear.
All of this has direct earnings implications, as estimates for the coming periods get trimmed.
2022 Q3 earnings are expected to be up +1.2% on +9.1% higher revenues. Keep in mind that it is the strong contribution from the Energy sector that is keeping the aggregate Q3 earnings growth in positive territory. Excluding the Energy sector, Q3 earnings for the rest of the S&P 500 index would be down -5.5% from the same period last year.
Analysts have been lowering their estimates since the quarter got underway.
The -5.5% decline expected in Q3 on an ex-Energy basis is down from +2.1% in early July.
Q3 estimates have come down for all sectors, except Energy and Autos, with the biggest declines at Consumer Discretionary, Basic Materials, Consumer Staples, Technology and Construction.
Estimates for 2022 Q4 and full-year 2024 have also been coming down.
The +6.9% earnings growth expected for the index this year drops to +0.3% once the Energy sector’s contribution is excluded.
Next Week’s Reporting Docket
The FedEx release was actually a pre-announcement, the actual quarterly report comes out on Thursday, September 22nd. There are 7 other S&P 500 members on deck to report results this week, in addition to FedEx. The ones we will be closely watching are from General Mills on Wednesday, Costco on Thursday.
Given the FedEx pre-announcement and the weak Adobe guidance, we will be closely watching whether the problems in these two companies are specific to them or something more endemic.
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.
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FedEx, UPS, General Mills, Costco and Adobe are part of Zacks Earnings Preview
For Immediate Release
Chicago, IL – September 19, 2022 – Zacks.com releases the list of companies likely to issue earnings surprises. This week’s list includes FedEx (FDX - Free Report) , UPS (UPS - Free Report) , General Mills (GIS - Free Report) , Costco (COST - Free Report) and Adobe (ADBE - Free Report) .
Reading Q3 Earnings Tea Leaves After the FedEx Bombshell
The FedEx pre-announcement has spooked the market as it feeds into the long-feared narrative of an impending negative turn in the economy.
FedEx, scheduled to report results on Thursday, September 22nd, came up short of its own targets as it faced fast-declining shipping demand in Asia and Europe, which the company sees as providing an early read on what to expect globally.
As we all know, FedEx is no ordinary economic actor, as its business literally touches every corner of the global economy. The shortfall in FedEx Ground, the unit that is tied closely to e-commerce deliveries in the U.S., has read-through implications for the U.S. consumer and operators in the digital economy. This is significant since the next few months of the year include the holiday shopping season.
As unsettling as FedEx’s bombshell is for our reading of the macro picture, we shouldn’t lose sight of the company’s operational and management challenges.
I see the withdrawal of the full-year guidance — that was initially put in place just three months back — by the new management team as more a comment on their grasp of the ground reality than the fast-shifting macro landscape. Needless to say that FedEx’s new management team is off to a terrible start in establishing its credibility with the market, particularly if UPS and others don’t validate their outlook.
FedEx’s company specific challenges notwithstanding, we know that the macroeconomic landscape is expected to be tougher. Europe is practically in a recession already and China has held itself down with its zero-Covid policy. The U.S. economy has been faring better, but everyone knows there is pain ahead. The Fed Chief ‘promised’ us that in his Jackson Hole speech.
The lagging effect of the extraordinary tightening already implemented and the incremental rate hikes ahead, including in next week’s Fed meeting, will at least slow down the economy — if not push us into a recession, as many have started to fear.
All of this has direct earnings implications, as estimates for the coming periods get trimmed.
2022 Q3 earnings are expected to be up +1.2% on +9.1% higher revenues. Keep in mind that it is the strong contribution from the Energy sector that is keeping the aggregate Q3 earnings growth in positive territory. Excluding the Energy sector, Q3 earnings for the rest of the S&P 500 index would be down -5.5% from the same period last year.
Analysts have been lowering their estimates since the quarter got underway.
The -5.5% decline expected in Q3 on an ex-Energy basis is down from +2.1% in early July.
Q3 estimates have come down for all sectors, except Energy and Autos, with the biggest declines at Consumer Discretionary, Basic Materials, Consumer Staples, Technology and Construction.
Estimates for 2022 Q4 and full-year 2024 have also been coming down.
The +6.9% earnings growth expected for the index this year drops to +0.3% once the Energy sector’s contribution is excluded.
Next Week’s Reporting Docket
The FedEx release was actually a pre-announcement, the actual quarterly report comes out on Thursday, September 22nd. There are 7 other S&P 500 members on deck to report results this week, in addition to FedEx. The ones we will be closely watching are from General Mills on Wednesday, Costco on Thursday.
Given the FedEx pre-announcement and the weak Adobe guidance, we will be closely watching whether the problems in these two companies are specific to them or something more endemic.
For a detailed look at the overall earnings picture, including expectations for the coming periods, please check out our weekly Earnings Trends report >>>> Q3 Earnings Season Gets Underway .
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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.
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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.