The third quarter earnings season is about to start. What should investors be looking for?
In prior quarters, Wall Street was expecting doom and gloom as a recession hit. But the recession hasn’t arrived throughout the entire economy yet and while earnings have fallen the last few quarters, the earnings estimates look like they may hit bottom in the third quarter.
Zacks has several great earnings charts that investors and traders can use during earnings season, but Tracey’s favorite is the price and consensus with EPS surprise chart.
This chart tells the full story of a company’s earnings track record in terms of beating, or missing and combines it with the consensus earnings estimates. This is the earnings outlook for the previous years, the current year and next year too. It’s a treasure trove of information.
After looking at these charts, is the earnings outlook bullish, or not?
5 Key Charts for Q3 Earnings Season
KeyCorp ( KEY Quick Quote KEY - Free Report)
KeyCorp is one of the big regional banks. It has missed 3 out of the last 4 quarters.
KeyCorp shares are down 42.3% year-to-date. It’s dirt cheap on a P/E basis with a forward P/E of 8.7. KeyCorp is also paying a huge dividend, currently yielding 8.1%.
It reports earnings on Oct 19, 2023. Is KeyCorp oversold heading into the report?
2. Tractor Supply Co. ( TSCO Quick Quote TSCO - Free Report)
Tractor Supply is a rural retailer which sells apparel, footwear, agriculture products and other items for “life out here.” It has missed 2 quarters in a row after having a winning streak during the pandemic.
Shares of Tractor Supply are down 8.2% year to date. It trades with a forward P/E of 19.8.
Is Tractor Supply still one of the top national retailers or is earnings growth going to slow?
3. Deckers Outdoor Corp. ( DECK Quick Quote DECK - Free Report)
Deckers owns two of the hottest shoe and apparel brands in UGG and Hoka. It has beat on earnings 7 quarters in a row and has only missed once in the last 5 years.
Deckers shares are up big in 2023, gaining 27.9%. It’s not cheap, with a forward P/E of 23. But Deckers is expected to grow earnings by 15.6% this year.
Is Deckers a good barometer of the economy?
4. Apple Inc. ( AAPL Quick Quote AAPL - Free Report)
Apple is a member of the new Magnificent 7 stocks and an investor favorite. It has an excellent earnings surprise track record with just 1 miss in the last 5 years but it came this year.
Shares of Apple are up 33.2% year-to-date but have fallen 8.6% over the last month. It’s still not cheap, with a forward P/E of 28. Earnings are actually expected to decline 1% this fiscal year.
Can Apple buck the negative sentiment on the stock this earnings season?
5. Exxon Mobil Corp. ( XOM Quick Quote XOM - Free Report)
Exxon Mobil is coming off an earnings miss last quarter but energy moves on the price of crude oil and natural gas. WTI retook the $90 level in the third quarter so analysts have been raising earnings estimates.
Shares of Exxon Mobil are up just 2.2% year-to-date but are hanging out around 5-year highs. It’s cheap with a forward P/E of just 12.3. Exxon Mobil also pays a dividend, currently yielding 3.1%.
Is it time to get back into the energy stocks like Exxon Mobil?