The earnings season has kick started with about 54 S&P 500 companies having already reported their results till Jul 19. Total earnings for these 54 companies (accounting for 16.9% of the index’s total market capitalization) are up 11.9% year over year on 5.5% higher revenues, with 79.6% beating earnings estimates and 72.2% surpassing top-line expectations. Based on the hitherto observed pattern, the second quarter is anticipated to register high single-digit percentage growth on a year-over-year basis.
Per the latest Earnings Trends, overall second-quarter earnings for all the S&P 500 companies are expected to be up 7.2% on a 4.5% growth in revenues. Although it represents a slightly tempered growth projection compared with the double-digit growth rate of the first quarter, the dollar amount of the total earnings is likely to be on par or even better than the all-time high achieved in fourth-quarter 2016. The relative improvement in the quarterly performance is largely due to a turnaround in the economy, better job market scenario and rising oil prices. Experts widely believe that earnings growth is likely to be in double digits in 2018 and beyond.
For the second quarter as a whole, about six of the 16 Zacks sectors are expected to witness an earnings decline, with Autos, Conglomerates and Utilities being the biggest drag.
The Business Services sector appears reasonably good. For the sector, earnings are expected to improve 4.5% year over year while sales are touted to increase 3.9%.
Let’s have a sneak peek at two industry players scheduled to report second-quarter 2017 earnings on Monday to see how things are shaping up for the upcoming results.
ManpowerGroup Inc. (MAN - Free Report) is scheduled to report results before the opening bell. The company is poised to benefit from a productive workforce and sound restructuring initiatives and expects its European business to strengthen in the quarter. ManpowerGroup is also likely to benefit from its cost recalibration and simplification plan.
In the second quarter, the company’s earnings are expected to rise 8.2% year over year on slightly better revenues. For the to-be-reported quarter, the company has an Earnings ESP of +1.16%, and Zacks Rank #2 (Buy), making an earnings surprise likely. A stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 or 3 (Hold) for a likely earnings beat. You can see the complete list of today’s Zacks #1 Rank stocks here.
Heidrick & Struggles International, Inc. (HSII - Free Report) is slated to report results after the closing bell. The company’s performance in the recent quarters was significantly hurt by protracted weakness in retaining senior consultants and issues with some of its operational implementation. We remain inconclusive on earnings beat prediction this quarter as it has an ESP of 0.00% and a Zacks Rank #3. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
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