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.
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:
With a little over two-thirds of the Q1 earnings results in already, we can say with a fair degree of confidence that the overall earnings picture remains resilient and stable, with companies not only beating estimates but also providing a reassuring-enough outlook for an otherwise uncertain macro environment.
Through the morning session of May 3rd, we have seen Q1 results from 343 S&P 500 members, or 68.6% of the index’s membership. Total Q1 earnings for these companies are down -1.6% on +4.1% higher revenues, with 77.6% beating EPS estimates and 74.3% beating revenue estimates.
Earnings aren’t great, but they aren’t bad either, given the uncertain macro backdrop and weak sentiment. Importantly, the tone and substance of management commentary continue to be favorable enough, which is helping keep negative estimate revisions in check.
A significant driver of Q1 earnings outperformance has been better than expected margins, with net margins for the companies that have reported shrinking 74 basis points (bps) vs. 142 bps in the preceding period. The Tech sector has really stood out regarding the stabilization of its margin outlook.
Corporate profits continue to defy the skeptics, with an above-average proportion of the companies that have reported results not only beating estimates but also providing reassuring enough guidance for the current coming quarters.
We are not suggesting that earnings are great, because they are not. After all, earnings growth is on track to be negative for the second quarter in a row, with the trend of declining profits expected to continue in the current period.
That said, the fear of all-around downbeat guidance and management commentary still remains just that, a fear. As a result, we continue to elude the earnings cliff that the market bears have been telling us about for a while.
Perhaps it’s only a question of time, with the day of reckoning only being deferred to the second half of the year. But for now, at least, we can feel relieved that the earnings picture is good enough.
There are so many examples of bellwether companies showing that while growth has come down and conditions remain challenging, they are still profitably operating. Consumers are still spending, though there are signs of weakness at the margin.
Strong results from the likes of Pepsi (PEP - Free Report) , Chipotle Mexican Grill (CMG - Free Report) , United Airlines (UAL - Free Report) , and many others show that consumer demand is holding up despite these companies implementing pricing increases.
Then there is Microsoft (MSFT - Free Report) , whose Q1 results and outlook for the current period, particularly in the cloud space, go some ways towards easing fears about enterprise software spending.
Regular readers of this earnings note know that earnings expectations have been steadily coming down since last year in response to a moderating economic outlook as a result of tighter monetary conditions.
Why Haven’t You Looked at Zacks' Top Stocks?
Since 2000, our top stock-picking strategies have blown away the S&P's +6.2 average gain per year. Amazingly, they soared with average gains of +46.4%, +49.5% and +55.2% per year. Today you can access their live picks without cost or obligation.
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: Pepsi, Chipotle Mexican Grill, United Airlines and Microsoft
For Immediate Release
Chicago, IL – May 4, 2023 – Zacks Director of Research Sheraz Mian says, "https://www.zacks.com/commentary/2089366/analyzing-the-q1-earnings-landscape."
Analyzing the Q1 Earnings Landscape
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:
Corporate profits continue to defy the skeptics, with an above-average proportion of the companies that have reported results not only beating estimates but also providing reassuring enough guidance for the current coming quarters.
We are not suggesting that earnings are great, because they are not. After all, earnings growth is on track to be negative for the second quarter in a row, with the trend of declining profits expected to continue in the current period.
That said, the fear of all-around downbeat guidance and management commentary still remains just that, a fear. As a result, we continue to elude the earnings cliff that the market bears have been telling us about for a while.
Perhaps it’s only a question of time, with the day of reckoning only being deferred to the second half of the year. But for now, at least, we can feel relieved that the earnings picture is good enough.
There are so many examples of bellwether companies showing that while growth has come down and conditions remain challenging, they are still profitably operating. Consumers are still spending, though there are signs of weakness at the margin.
Strong results from the likes of Pepsi (PEP - Free Report) , Chipotle Mexican Grill (CMG - Free Report) , United Airlines (UAL - Free Report) , and many others show that consumer demand is holding up despite these companies implementing pricing increases.
Then there is Microsoft (MSFT - Free Report) , whose Q1 results and outlook for the current period, particularly in the cloud space, go some ways towards easing fears about enterprise software spending.
Regular readers of this earnings note know that earnings expectations have been steadily coming down since last year in response to a moderating economic outlook as a result of tighter monetary conditions.
Why Haven’t You Looked at Zacks' Top Stocks?
Since 2000, our top stock-picking strategies have blown away the S&P's +6.2 average gain per year. Amazingly, they soared with average gains of +46.4%, +49.5% and +55.2% per year. Today you can access their live picks without cost or obligation.
See Stocks Free >>
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.