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Q2 GDP Disappoints, Q2 Earnings Mixed Ahead of Bell: XOM, CVX, UPS, ABBV, BCS

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Friday, July 29, 2016

Second quarter Gross Domestic Product (GDP) results were released before Friday’s market open, and the results were, by any measure, quite lackluster: 1.2% growth was recorded in the first read of Q2 GDP. This is only half of what analysts were looking for. Q1 GDP was revised down to a paltry 0.8%.

While the Consumer side performed admirably at +4.2% (even though this was slightly below expectations, as well), we saw a 6.1% drop in Housing, Business Investment was down 2.2% and Government Purchases fell 0.9%.

Again, not good by any stretch, and if 2016 is going to be where the U.S. economy gains serious traction, it’s going to have to outperform expectations just to get us where we thought we’d be at the start of the year. Overall, we see a +/- 1.3% rate on subsequent revisions for full year 2016.

Here’s the latest run-down on earnings reports released prior to Friday’s opening bell:

Exxon XOM, formerly the largest corporation on earth, missed badly on both top and bottom lines. Earnings of 41 cents per share was far below the 64 cents analysts had expected, and revenues of $57.7 billion missed the $60.1 billion expected (and a far cry from a decade ago, when Exxon was pulling in $100 billion in revenues per quarter). Sharply lower commodity prices were largely at fault, along with weaker refining margins.

Another super-major integrated oil company, Chevron CVX, beat sales expectations of $29.2 billion versus the $28.5 billion estimate. However, the company posted a big earnings loss on a $2.1 billion write down in the quarter. This was the company’s worse loss since 2001.

U.K.-based Barclays BCS posted stronger earnings on in-line revenues for the quarter, raising eyebrows on the Street this morning with an impressive 11% growth in Barclays’ core business. As a result, BCS shares are up 7.6% in pre-market trading.

Logistics major UPS UPS met consensus expectations on both top and bottom lines this morning. Volume was labeled “unusual” for the quarter, and as a result shares were down 1.5% on the release of the report.

Drug-maker AbbVie (ABBV - Free Report) reported an impressive beat on its bottom line consensus estimate: $1.26 per share was reported versus expectations of $1.20. The company also raised guidance for fiscal 2016.

For in-depth consideration of how Q2 earnings season is unfolding, click here for Zacks Director of Research Sheraz Mian’s latest Earnings Trends report.

Mark Vickery
Senior Editor


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