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5 U.S. Giants Set to Beat on Q1 Earnings Next Week
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Wall Street is set to kick off the first-quarter 2023 earnings season this week. Market participants will try to analyze this reporting cycle against the backdrop of a possible recession later this year. Therefore, this season, management guidance and the near-term business outlook will get more importance than actual results. In addition to earnings and revenues, margins will get more attention from financial researchers.
Bleak Outlook for Q1 Earnings Season
As of Apr 12, our estimates have shown that total earnings of the S&P 500 Index are expected to be down 10% year over year on 1.7% higher revenues. This will follow a 5.4% year-over-year decline in earnings of the S&P 500 Index on 5.9% higher revenues in fourth-quarter 2022. The aggregate EPS estimate for the S&P 500 Index for fiscal 2023 has been steadily declining since Jun 15, 2022.
This earnings season is likely to witness the fifth consecutive quarter of year-over-year decline in net margins of the S&P 500 Index. The aggregate net margin is likely to decline 1.47% in Q1 2023. If this happens, it will mark the biggest quarterly decline since the 1.38% year-over-year net margin decline in Q4 2022.
Stocks to Watch
We have narrowed our search to five U.S. corporate bigwigs that are set to report first-quarter 2023 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 stocks mentioned-below in past month.
Image Source: Zacks Investment Research
State Street Corp. (STT - Free Report) provides a range of financial products and services to institutional investors worldwide. A higher interest rate regime, solid business servicing wins, strategic acquisitions, global reach and efforts to technologically upgrade operations are expected to keep supporting STT’s revenues.
Our estimates for total revenues suggest a CAGR of 3.4% by 2025. STT’s steady capital deployments will enhance shareholder value. While a challenging operating backdrop amid macroeconomic headwinds will put some strain on fee income, we project the same to be relatively stable in 2023.
State Street has an Earnings ESP of +0.68%. It has an expected earnings growth rate of 12.2% for the current year. The Zacks Consensus Estimate for current-year earnings improved 0.6% over the last 90 days.
State Street Fair recorded earnings surprises in the last four reported quarters, with an average beat of 5.9%. STT is set to release earnings results on Apr 17, before the opening bell.
The Bank of New York Mellon Corp. (BK - Free Report) provides a range of financial products and services in the United States and internationally. Global expansion plans, robust assets under management balance, business restructuring, solid balance sheet position and digitizing operations will keep supporting the revenues of BK.
Our estimates for total revenues suggest a CAGR of 2.7% over the next three years ended 2025. Higher interest rates will support net interest revenues and margins of BK in the upcoming quarters. Our estimates for NIR suggest a jump of 20% this year.
The Bank of New York Mellon has an Earnings ESP of +2.29%. It has an expected earnings growth rate of 3.3% for the current year. The Zacks Consensus Estimate for current-year earnings improved 2.4% over the last 90 days.
The Bank of New York Mellon recorded earnings surprises in the last four reported quarters, with an average beat of 4.8%. BK is set to release earnings results on Apr 18, before the opening bell.
Tesla Inc. (TSLA - Free Report) is set to benefit from the soaring popularity of its Models 3 and Y. We expect deliveries to see an annualized growth of around 33% in 2023. Production ramp-up at gigafactory 4 (in Berlin) and 5 (in Austin) and the introduction of new models, including Semi and Cybertruck, are set to support long-term deliveries growth of TSLA.
Additionally, TSLA’s energy generation and storage revenues outlook is promising. Another positive is falling debt levels. While inflation and economic concerns could pose near-term challenges, we expect TSLA to deliver outsized returns in the long run on the back of output ramp-up and the introduction of new models.
Tesla has an Earnings ESP of +1.22%. TSLA recorded earnings surprises in the last four reported quarters, with an average beat of 23.6%. Tesla is set to release earnings results on Apr 19, after the closing bell.
Nasdaq Inc. (NDAQ - Free Report) has been successful in maximizing opportunities as a technology and analytics provider and growing core marketplace businesses. Focus on growth via acquisitions and organic initiatives, which aided entry into new markets and helped NDAQ gain cross-selling opportunities, bodes well.
Intense focus on Market Technology and Information Services businesses also helps NDAQ to explore vast opportunities per its developmental strategies. A strong balance sheet and robust cash position help capitalize on growth opportunities. NDAQ remains committed to deploying capital effectively by investing in organic growth initiatives.
Nasdaq has an Earnings ESP of +0.86%. It has an expected earnings growth rate of 1.1% for the current year. NDAQ recorded earnings surprises in the last four reported quarters, with an average beat of 3.4%. Nasdaq is set to release earnings results on Apr 19, before the opening bell.
Discover Financial Services (DFS - Free Report) provides digital banking products and services, and payment services in the United States. DFS’ integrated digital banking and payments model and the ongoing economic recovery are buoying its performance.
Expanding global payments operations and an attractive core business poise DFS well for growth. Several digital transformation efforts bode well for DFS. Its strong balance sheet is a major positive. A solid financial position enables Discover Financial to deploy capital.
Discover Financial has an Earnings ESP of +0.99%. DFS recorded earnings surprises in three out of the last four reported quarters, with an average beat of 6.4%. DFS is set to release earnings results on Apr 19, after the closing bell.
Image: Bigstock
5 U.S. Giants Set to Beat on Q1 Earnings Next Week
Wall Street is set to kick off the first-quarter 2023 earnings season this week. Market participants will try to analyze this reporting cycle against the backdrop of a possible recession later this year. Therefore, this season, management guidance and the near-term business outlook will get more importance than actual results. In addition to earnings and revenues, margins will get more attention from financial researchers.
Bleak Outlook for Q1 Earnings Season
As of Apr 12, our estimates have shown that total earnings of the S&P 500 Index are expected to be down 10% year over year on 1.7% higher revenues. This will follow a 5.4% year-over-year decline in earnings of the S&P 500 Index on 5.9% higher revenues in fourth-quarter 2022. The aggregate EPS estimate for the S&P 500 Index for fiscal 2023 has been steadily declining since Jun 15, 2022.
This earnings season is likely to witness the fifth consecutive quarter of year-over-year decline in net margins of the S&P 500 Index. The aggregate net margin is likely to decline 1.47% in Q1 2023. If this happens, it will mark the biggest quarterly decline since the 1.38% year-over-year net margin decline in Q4 2022.
Stocks to Watch
We have narrowed our search to five U.S. corporate bigwigs that are set to report first-quarter 2023 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 stocks mentioned-below in past month.
Image Source: Zacks Investment Research
State Street Corp. (STT - Free Report) provides a range of financial products and services to institutional investors worldwide. A higher interest rate regime, solid business servicing wins, strategic acquisitions, global reach and efforts to technologically upgrade operations are expected to keep supporting STT’s revenues.
Our estimates for total revenues suggest a CAGR of 3.4% by 2025. STT’s steady capital deployments will enhance shareholder value. While a challenging operating backdrop amid macroeconomic headwinds will put some strain on fee income, we project the same to be relatively stable in 2023.
State Street has an Earnings ESP of +0.68%. It has an expected earnings growth rate of 12.2% for the current year. The Zacks Consensus Estimate for current-year earnings improved 0.6% over the last 90 days.
State Street Fair recorded earnings surprises in the last four reported quarters, with an average beat of 5.9%. STT is set to release earnings results on Apr 17, before the opening bell.
The Bank of New York Mellon Corp. (BK - Free Report) provides a range of financial products and services in the United States and internationally. Global expansion plans, robust assets under management balance, business restructuring, solid balance sheet position and digitizing operations will keep supporting the revenues of BK.
Our estimates for total revenues suggest a CAGR of 2.7% over the next three years ended 2025. Higher interest rates will support net interest revenues and margins of BK in the upcoming quarters. Our estimates for NIR suggest a jump of 20% this year.
The Bank of New York Mellon has an Earnings ESP of +2.29%. It has an expected earnings growth rate of 3.3% for the current year. The Zacks Consensus Estimate for current-year earnings improved 2.4% over the last 90 days.
The Bank of New York Mellon recorded earnings surprises in the last four reported quarters, with an average beat of 4.8%. BK is set to release earnings results on Apr 18, before the opening bell.
Tesla Inc. (TSLA - Free Report) is set to benefit from the soaring popularity of its Models 3 and Y. We expect deliveries to see an annualized growth of around 33% in 2023. Production ramp-up at gigafactory 4 (in Berlin) and 5 (in Austin) and the introduction of new models, including Semi and Cybertruck, are set to support long-term deliveries growth of TSLA.
Additionally, TSLA’s energy generation and storage revenues outlook is promising. Another positive is falling debt levels. While inflation and economic concerns could pose near-term challenges, we expect TSLA to deliver outsized returns in the long run on the back of output ramp-up and the introduction of new models.
Tesla has an Earnings ESP of +1.22%. TSLA recorded earnings surprises in the last four reported quarters, with an average beat of 23.6%. Tesla is set to release earnings results on Apr 19, after the closing bell.
Nasdaq Inc. (NDAQ - Free Report) has been successful in maximizing opportunities as a technology and analytics provider and growing core marketplace businesses. Focus on growth via acquisitions and organic initiatives, which aided entry into new markets and helped NDAQ gain cross-selling opportunities, bodes well.
Intense focus on Market Technology and Information Services businesses also helps NDAQ to explore vast opportunities per its developmental strategies. A strong balance sheet and robust cash position help capitalize on growth opportunities. NDAQ remains committed to deploying capital effectively by investing in organic growth initiatives.
Nasdaq has an Earnings ESP of +0.86%. It has an expected earnings growth rate of 1.1% for the current year. NDAQ recorded earnings surprises in the last four reported quarters, with an average beat of 3.4%. Nasdaq is set to release earnings results on Apr 19, before the opening bell.
Discover Financial Services (DFS - Free Report) provides digital banking products and services, and payment services in the United States. DFS’ integrated digital banking and payments model and the ongoing economic recovery are buoying its performance.
Expanding global payments operations and an attractive core business poise DFS well for growth. Several digital transformation efforts bode well for DFS. Its strong balance sheet is a major positive. A solid financial position enables Discover Financial to deploy capital.
Discover Financial has an Earnings ESP of +0.99%. DFS recorded earnings surprises in three out of the last four reported quarters, with an average beat of 6.4%. DFS is set to release earnings results on Apr 19, after the closing bell.
Stay on top of upcoming earnings announcements with the Zacks Earnings Calendar