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Zacks Earnings Trends Highlights: JPMorgan, Wells Fargo, Oracle, Adobe and FedEx

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For Immediate Release

Chicago, IL – June 22, 2018 – Zacks Director of Research Sheraz Mian says, “Total Q2 earnings for the S&P 500 index are expected to be up +18.3% from the same period last year on +8% higher revenues, with 10 of the 16 Zacks sectors expected to have double-digit earnings growth.”

Previewing Q2 Earnings Season

Note: The following is an excerpt from this week’s Earnings Trends report. You can access the full report that contains detailed historical actual and estimates for the current and following periods, please click here>>>

Here are the key points:

•    Total Q2 earnings for the S&P 500 index are expected to be up +18.3% from the same period last year on +8% higher revenues, with 10 of the 16 Zacks sectors expected to have double-digit earnings growth.

•    Earnings growth in the last earnings season (20018 Q1) reached its highest level in more than 7 years at +24.3% on +7.2% revenue gains.

•    Q2 estimates moved up modestly since the quarter got underway, but the aggregate positive revision was primarily because of the Energy sector. Excluding the Energy sector, estimates for the quarter would be modestly down in the last 10 weeks.

•    Estimates went up for the Energy, Technology and Retail sectors and went down for the Consumer Discretionary, Consumer Staples, Autos, and Finance sectors.

•    Tech sector earnings are expected to be up +22.7% on +10.5% higher revenues, which would follow +31.1% earnings growth on +13.1% revenue growth in Q1.

•    Finance sector earnings are expected to be up +18.2% from the same period last year on +3.4% higher revenues.  

•    Earnings growth is expected to be in double-digit territory for 10 of the 16 Zacks sectors, with Autos and Conglomerates as the only sectors expected to have lower Q2 earnings compared to the year-earlier level.

•    For the small-cap S&P 600 index, total Q2 earnings are expected to be up +30.5% on +10.7% higher revenues, which would follow +20.5% earnings growth on +7.6% revenue growth in 2018 Q1.

•    For full-year 2018, total earnings for the S&P 500 index are expected to be up +19.9% on +6.1% higher revenues. For full-years 2019 and 2020, earnings are expected to be up +9.8% and +9.6%, respectively. Revenues for the index are expected to be increase by +4.6% in 2019, and +4.4% in 2020.

•    The implied ‘EPS’ for the index, calculated using current 2018 P/E of 17.6X and index close, as of June 19th, is $156.86. Using the same methodology, the index ‘EPS’ works out to $172.26 for 2019 (P/E of 16X) and $188.82 for 2020 (P/E of 14.6X). The multiples for 2018, 2019 and 2020 have been calculated using the index’s total market cap and aggregate bottom-up earnings for each year.   

Q2 Earnings Season Expectations

We still have a few weeks to go before the Q2 earnings season takes center stage; that will happen with the JPMorgan (JPM - Free Report) and Wells Fargo (WFC - Free Report) earnings releases on July 13th. Taking nothing away from the big bank results, but the Q2 earnings season has actually gotten underway already, with the recent Oracle (ORCL - Free Report) , Adobe (ADBE - Free Report) and FedEx (FDX - Free Report) reports part of the 5 S&P 500 members that have reported results already.

All of these early results are from companies with fiscal quarters ending in May, but they form part of our June-quarter tally. We will have seen such Q2 results from almost two dozen S&P 500 members with fiscal quarters ending in May by the time the big banks come out with results.

Total Q2 earnings for the S&P 500 index are expected to be up +18.3% from the same period last year on +8% higher revenues, with double-digit earnings growth for 10 of the 16 Zacks sectors, including Finance and Technology. This would be the 3rd quarter in a row of double-digit earnings growth for the index, a trend that is currently expected to continue in the second half of the year as well.

Energy sector earnings are expected to more than double from the year-earlier level, up +134.3%. Excluding the Energy sector, Total Q2 earnings for the rest of the index would be up +15%.

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