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Tech Stock Earnings Due on Apr 27: MSFT, GOOGL, INTC, BIDU
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The first-quarter earnings season is underway with results from 95 S&P 500 members or 24.9% of the index’s total market capitalization already out (as of April 21). We expect around 800 companies to report results this week, including 191 S&P 500 members.
Per the latest Earnings Preview, total earnings of these index members are up 14.3% year over year on the back of 4.6% higher revenues. Beat ratios are impressive with 72.6% surpassing earnings estimates and 62.1% coming ahead of revenue expectations.
Total Q1 earnings are expected to rise 9.1% from the year-ago period on revenue growth of 6%. Five of 16 Zacks sectors are expected to witness a decline in earnings in the first quarter, with Conglomerates, Autos and Transportation being the biggest drag.
This week, technology will be in the spotlight, as several major companies including Microsoft (MSFT - Free Report) , Alphabet (GOOGL - Free Report) aka Google, Intel (INTC - Free Report) and Baidu (BIDU - Free Report) are slated to report their quarterly earnings on Apr 27. Let’s see what’s ahead for these four:
Microsoft Corporation,one of the world’s largest broad-based technology providers, is slated to release third-quarter fiscal 2017 results.
According to our model, a company needs to have the right combination of two key ingredients, a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold), to increase its odds of an earnings surprise. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Consequently, we do not expect Microsoft to post an earnings beat since it carries a Zacks Rank #4 (Sell) and an Earnings ESP of 0.00%. We caution against stocks with a Zacks Rank #4 or 5 (Strong Sell) going into the earnings announcement, especially when the company is witnessing negative estimate revisions.
Amazon continues to dominate the cloud computing market with Amazon Web Services trailed by Microsoft Azure. However, we believe that increasing competition from the likes of Alphabet, IBM, salesforce.com and Oracle will hurt Microsoft’s market share going ahead.
Moreover, sluggish IT spending is a major headwind for Microsoft. Notably, Microsoft results surpassed the Zacks Consensus Estimate in three of the preceding four quarters. It has an average four-quarter positive surprise of 8.55%.
We also don’t expect Alphabet Inc., a leading provider of target-based advertisements on the web, to post an earnings beat when it reports first-quarter 2017 results.
However, Alphabet’s top line is expected to benefit from the strength in the mobile platform. Also, YouTube remains a strong contributor benefiting from the increase in online video consumption. (Read more: Will Alphabet Surprise Investors in Q1 Earnings?)
Notably, Alphabet missed estimates twice in the last four quarters. It has an average four-quarter positive surprise of 2.71%.
Similarly, we also don’t expect Intel Corp., the world’s largest manufacturer of semiconductor products, to outperform estimates when it reports first-quarter 2017 results. The company carries a Zacks Rank #4 and has an Earnings ESP of 0.00%.
We note that Intel’s growing focus on areas with better growth prospects, such as the artificial intelligence, autonomous car and Internet of Things businesses are key catalysts. However, increasing competition in the data center market is a headwind. Also, sluggish PC market growth will continue to hurt Client Computing Group growth. (Read More: Intel to Report Q1 Earnings: What's in the Cards?)
However, Intel’s surprise history is impressive as it surpassed estimates in each of the trailing four quarters. It has an average four-quarter positive surprise of 9.11%.
We again do not expect Baidu, Inc., a Chinese-language Internet search provider, to outperform estimates when it reports first-quarter 2017 results. The company has a Zacks Rank #3 and an Earnings ESP of 0.00%.
Baidu’s growing presence in the online video market is likely to improve its competitive position. Also, the company’s strong dominance in the mobile search market and its consistent product development efforts remain positives. The company continues to strengthen its offerings through various agreements in China, where it is pitted against the country’s biggest e-Commerce operator, Alibaba Group Holding Limited.
However, increasing competition on its own search platform and higher expenses incurred from new investments could affect top-line growth in the to-be-reported quarter.
Baidu’s surprise history is impressive as it surpassed estimates in all the last four quarters. It has an average four-quarter positive surprise of 36.89%.
Today's investment ideas are short-term, directly based on our proven 1 to 3 month indicator. In addition, I invite you to consider our long-term opportunities. These rare trades look to start fast with strong Zacks Ranks, but carry through with double and triple-digit profit potential. Starting now, you can look inside our home run, value, and stocks under $10 portfolios, plus more.
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Tech Stock Earnings Due on Apr 27: MSFT, GOOGL, INTC, BIDU
The first-quarter earnings season is underway with results from 95 S&P 500 members or 24.9% of the index’s total market capitalization already out (as of April 21). We expect around 800 companies to report results this week, including 191 S&P 500 members.
Per the latest Earnings Preview, total earnings of these index members are up 14.3% year over year on the back of 4.6% higher revenues. Beat ratios are impressive with 72.6% surpassing earnings estimates and 62.1% coming ahead of revenue expectations.
Total Q1 earnings are expected to rise 9.1% from the year-ago period on revenue growth of 6%. Five of 16 Zacks sectors are expected to witness a decline in earnings in the first quarter, with Conglomerates, Autos and Transportation being the biggest drag.
This week, technology will be in the spotlight, as several major companies including Microsoft (MSFT - Free Report) , Alphabet (GOOGL - Free Report) aka Google, Intel (INTC - Free Report) and Baidu (BIDU - Free Report) are slated to report their quarterly earnings on Apr 27. Let’s see what’s ahead for these four:
Microsoft Corporation,one of the world’s largest broad-based technology providers, is slated to release third-quarter fiscal 2017 results.
According to our model, a company needs to have the right combination of two key ingredients, a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold), to increase its odds of an earnings surprise. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Consequently, we do not expect Microsoft to post an earnings beat since it carries a Zacks Rank #4 (Sell) and an Earnings ESP of 0.00%. We caution against stocks with a Zacks Rank #4 or 5 (Strong Sell) going into the earnings announcement, especially when the company is witnessing negative estimate revisions.
Amazon continues to dominate the cloud computing market with Amazon Web Services trailed by Microsoft Azure. However, we believe that increasing competition from the likes of Alphabet, IBM, salesforce.com and Oracle will hurt Microsoft’s market share going ahead.
Moreover, sluggish IT spending is a major headwind for Microsoft. Notably, Microsoft results surpassed the Zacks Consensus Estimate in three of the preceding four quarters. It has an average four-quarter positive surprise of 8.55%.
Microsoft Corporation Price and EPS Surprise
Microsoft Corporation Price and EPS Surprise | Microsoft Corporation Quote
We also don’t expect Alphabet Inc., a leading provider of target-based advertisements on the web, to post an earnings beat when it reports first-quarter 2017 results.
This is because the company has an Earnings ESP of 0.00% and a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
However, Alphabet’s top line is expected to benefit from the strength in the mobile platform. Also, YouTube remains a strong contributor benefiting from the increase in online video consumption. (Read more: Will Alphabet Surprise Investors in Q1 Earnings?)
Notably, Alphabet missed estimates twice in the last four quarters. It has an average four-quarter positive surprise of 2.71%.
Alphabet Inc. Price and EPS Surprise
Alphabet Inc. Price and EPS Surprise | Alphabet Inc. Quote
Similarly, we also don’t expect Intel Corp., the world’s largest manufacturer of semiconductor products, to outperform estimates when it reports first-quarter 2017 results. The company carries a Zacks Rank #4 and has an Earnings ESP of 0.00%.
We note that Intel’s growing focus on areas with better growth prospects, such as the artificial intelligence, autonomous car and Internet of Things businesses are key catalysts. However, increasing competition in the data center market is a headwind. Also, sluggish PC market growth will continue to hurt Client Computing Group growth. (Read More: Intel to Report Q1 Earnings: What's in the Cards?)
However, Intel’s surprise history is impressive as it surpassed estimates in each of the trailing four quarters. It has an average four-quarter positive surprise of 9.11%.
Intel Corporation Price and EPS Surprise
Intel Corporation Price and EPS Surprise | Intel Corporation Quote
We again do not expect Baidu, Inc., a Chinese-language Internet search provider, to outperform estimates when it reports first-quarter 2017 results. The company has a Zacks Rank #3 and an Earnings ESP of 0.00%.
Baidu’s growing presence in the online video market is likely to improve its competitive position. Also, the company’s strong dominance in the mobile search market and its consistent product development efforts remain positives. The company continues to strengthen its offerings through various agreements in China, where it is pitted against the country’s biggest e-Commerce operator, Alibaba Group Holding Limited.
However, increasing competition on its own search platform and higher expenses incurred from new investments could affect top-line growth in the to-be-reported quarter.
Baidu’s surprise history is impressive as it surpassed estimates in all the last four quarters. It has an average four-quarter positive surprise of 36.89%.
Baidu, Inc. Price and EPS Surprise
Baidu, Inc. Price and EPS Surprise | Baidu, Inc. Quote
Looking for Ideas with Even Greater Upside?
Today's investment ideas are short-term, directly based on our proven 1 to 3 month indicator. In addition, I invite you to consider our long-term opportunities. These rare trades look to start fast with strong Zacks Ranks, but carry through with double and triple-digit profit potential. Starting now, you can look inside our home run, value, and stocks under $10 portfolios, plus more.
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