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.
Conagra, Lamb Weston, Walgreens Boots Alliance and Constellation Brands are part of Zacks Earnings Preview
Read MoreHide Full Article
For Immediate Release
Chicago, IL – January 2, 2024 – Zacks.com releases the list of companies likely to issue earnings surprises. This week’s list includes Conagra (CAG - Free Report) , Lamb Weston (LW - Free Report) , Walgreens Boots Alliance (WBA - Free Report) and Constellation Brands (STZ - Free Report) .
How Will Earnings Estimates Evolve in 2024?
The economy's resilience in the face of the Fed's extraordinary tightening has been a pleasant surprise. At this time last year, hardly any economist was projecting that the U.S. economy would generate the type of growth momentum that we experienced.
That said, it makes sense for growth to moderate going forward to reflect the cumulative effect of monetary policy tightening. However, the earlier higher-for-longer view of interest rates has been modified by the updated Fed outlook that suggests the central bank is getting ready to start easing at some stage in the New Year.
All of this has direct earnings implications, as estimates for the coming periods get trimmed.
2022 Q4 earnings are expected to be down -0.4% on +2.3% higher revenues. This follows the +3.8% earnings growth reading in the preceding period (2023 Q3) and three back-to-back quarters of declining earnings before that.
This chart, which is an accurate representation of current bottom-up consensus earnings expectations aggregated to the index level, does not see an earnings recession over the next three quarters. If anything, revenue growth is trending up over this period.
What we do see in the above chart is the three-quarter period of negative earnings growth from the fourth quarter of 2022 to the second quarter of 2023. Recessions are typically seen as two periods of declining growth.
Looking at this way, the earnings recession issue is in the rear-view mirror at this stage, not something on the horizon.
It isn't just the next three quarters where the long-feared recession is missing in action, but actually over the next two years, as you can see above.
The earnings recession proponents have been telling us for more than a year that earnings estimates were out-of-sync with the underlying economic reality and needed to be cut in a big way.
We did see a period of significant negative estimate revisions that started in April 2022 and lasted for about a year. During that period, estimates in the aggregate declined by about -15% from peak to trough, with the magnitude of negative revisions for several sectors exceeding -20%. These included Construction, Consumer Discretionary, Technology, and Retail.
The revisions trend stabilized in April 2023, with earnings estimates for several major sectors, including the Tech sector, going up again. This favorable revisions trend remained in place until October 2023 when estimates started coming down all over again.
Estimates for full-year 2024 have also been coming down, though the revisions trend appears to have started improving again lately.
One sector whose earnings outlook appears to have notably turned around is the Tech sector. This sector has a bigger bearing on the aggregate earnings picture than any of the 15 Zacks sectors in the S&P 500 index, as it is on track to bring in more than 28% of the index's total earnings over the coming four-quarter period.
Other sectors whose 2024 earnings estimates also appear to have inched up lately include Retail, Autos, Aerospace, and Utilities.
While estimates for all the other sectors are still under pressure, sectors facing the most pressure on estimates include Transportation, Industrial Products, and Consumer Discretionary.
This Week's Reporting Docket
The Q4 reporting cycle will really get going when the big banks start reporting their results on January 12th. But the earnings season has actually gotten underway already, with results from 17 S&P 500 members out through Friday, December 29th.
All of these 17 index members, including bellwethers like FedEx, Nike, Costco, and others, have reported results for their fiscal quarters ending in November. We count all such November-quarter results as part of our December-quarter tally.
We have another four S&P 500 members on deck to come out with their fiscal November-quarter results in the first week of the New Year. These include Conagra, Lamb Weston, and Walgreens Boots Alliance on Thursday, January 4th, and Constellation Brands on Friday, January 5th.
Total earnings for these 17 index members are up +13.8% from the same period last year on +3.8% higher revenues, with 88.2% beating EPS estimates and 52.9% beating revenue estimates.
This is way too small a sample of results to draw conclusions about the coming reporting season. But at this early stage,
Earnings and revenue growth rates for this group of 17 index members are tracking better than we had seen for the same group of companies in other recent periods.
Companies are beating EPS estimates comfortably but appear to be struggling with beating revenue estimates.
For a detailed look at the overall earnings picture, including expectations for the coming periods, please check out our weekly Earnings Trends report >>>> Q4 Earnings Loom: What to Expect
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/performancefor 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
Conagra, Lamb Weston, Walgreens Boots Alliance and Constellation Brands are part of Zacks Earnings Preview
For Immediate Release
Chicago, IL – January 2, 2024 – Zacks.com releases the list of companies likely to issue earnings surprises. This week’s list includes Conagra (CAG - Free Report) , Lamb Weston (LW - Free Report) , Walgreens Boots Alliance (WBA - Free Report) and Constellation Brands (STZ - Free Report) .
How Will Earnings Estimates Evolve in 2024?
The economy's resilience in the face of the Fed's extraordinary tightening has been a pleasant surprise. At this time last year, hardly any economist was projecting that the U.S. economy would generate the type of growth momentum that we experienced.
That said, it makes sense for growth to moderate going forward to reflect the cumulative effect of monetary policy tightening. However, the earlier higher-for-longer view of interest rates has been modified by the updated Fed outlook that suggests the central bank is getting ready to start easing at some stage in the New Year.
All of this has direct earnings implications, as estimates for the coming periods get trimmed.
2022 Q4 earnings are expected to be down -0.4% on +2.3% higher revenues. This follows the +3.8% earnings growth reading in the preceding period (2023 Q3) and three back-to-back quarters of declining earnings before that.
This chart, which is an accurate representation of current bottom-up consensus earnings expectations aggregated to the index level, does not see an earnings recession over the next three quarters. If anything, revenue growth is trending up over this period.
What we do see in the above chart is the three-quarter period of negative earnings growth from the fourth quarter of 2022 to the second quarter of 2023. Recessions are typically seen as two periods of declining growth.
Looking at this way, the earnings recession issue is in the rear-view mirror at this stage, not something on the horizon.
It isn't just the next three quarters where the long-feared recession is missing in action, but actually over the next two years, as you can see above.
The earnings recession proponents have been telling us for more than a year that earnings estimates were out-of-sync with the underlying economic reality and needed to be cut in a big way.
We did see a period of significant negative estimate revisions that started in April 2022 and lasted for about a year. During that period, estimates in the aggregate declined by about -15% from peak to trough, with the magnitude of negative revisions for several sectors exceeding -20%. These included Construction, Consumer Discretionary, Technology, and Retail.
The revisions trend stabilized in April 2023, with earnings estimates for several major sectors, including the Tech sector, going up again. This favorable revisions trend remained in place until October 2023 when estimates started coming down all over again.
Estimates for full-year 2024 have also been coming down, though the revisions trend appears to have started improving again lately.
One sector whose earnings outlook appears to have notably turned around is the Tech sector. This sector has a bigger bearing on the aggregate earnings picture than any of the 15 Zacks sectors in the S&P 500 index, as it is on track to bring in more than 28% of the index's total earnings over the coming four-quarter period.
Other sectors whose 2024 earnings estimates also appear to have inched up lately include Retail, Autos, Aerospace, and Utilities.
While estimates for all the other sectors are still under pressure, sectors facing the most pressure on estimates include Transportation, Industrial Products, and Consumer Discretionary.
This Week's Reporting Docket
The Q4 reporting cycle will really get going when the big banks start reporting their results on January 12th. But the earnings season has actually gotten underway already, with results from 17 S&P 500 members out through Friday, December 29th.
All of these 17 index members, including bellwethers like FedEx, Nike, Costco, and others, have reported results for their fiscal quarters ending in November. We count all such November-quarter results as part of our December-quarter tally.
We have another four S&P 500 members on deck to come out with their fiscal November-quarter results in the first week of the New Year. These include Conagra, Lamb Weston, and Walgreens Boots Alliance on Thursday, January 4th, and Constellation Brands on Friday, January 5th.
Total earnings for these 17 index members are up +13.8% from the same period last year on +3.8% higher revenues, with 88.2% beating EPS estimates and 52.9% beating revenue estimates.
This is way too small a sample of results to draw conclusions about the coming reporting season. But at this early stage,
For a detailed look at the overall earnings picture, including expectations for the coming periods, please check out our weekly Earnings Trends report >>>> Q4 Earnings Loom: What to Expect
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/performancefor information about the performance numbers displayed in this press release.