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Internet Stocks' Q2 Earnings on Jul 30: CHGG, INST & More

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The second-quarter 2018 reporting cycle is in full swing and has been displaying encouraging trends, especially on the revenue side.

Per the latest Earnings Outlook, total earnings of the 217 S&P 500 members, constituting 54.1% of the index, which have already reported are up 21.8% on a year-over-year basis (81.6% of the companies beat EPS estimates). Total revenues are up 8.8% (72.8% of the companies beat top-line estimates). Of these companies, 63.1% beat both earnings and revenue estimates.

Second-quarter earnings of S&P 500 companies are anticipated to be up 22.3% from the year-ago quarter on revenues that are estimated to increase 8.4%. For full-year 2018, total S&P 500 earnings are anticipated to be up 20.4% from the year-ago quarter on revenues that are estimated to increase 6.2%.

Notably, the Technology, Finance, Energy, Basic Materials, Industrial Products and Retail sectors are expected to come up with an impressive quarterly performance. The Autos and Conglomerates sectors’ performance might be a tad bit disappointing in this reporting cycle.

Technology Earnings So Far & Expectations

We believe a surge in demand for data centers and cloud-based platforms has aided earnings growth so far. Demand for augmented/virtual reality devices, advanced driver assisted systems (ADAS), Artificial Intelligence (AI) solutions and Internet of Things (IoT) related software also increased, leading to the splendid figures.

Notwithstanding the dismal results of Facebook , overall results for the space have been impressive. Alphabet (GOOGL - Free Report) earnings almost doubled year over year on 25% top-line growth. Microsoft’s (MSFT - Free Report) bottom line increased 14.4% while revenues increased 21.8% from the year-ago period.

Total earnings of technology companies are expected to increase 28.7% (up from the previous expectation of 23.5%) on a year-over-year basis. Total revenues are anticipated to increase 11.6% (up from the previous expectation of 11%).

Our research shows that a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) stock when combined with a positive Earnings ESP has high chances of beating earnings estimates. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Meanwhile, we caution against stocks with a Zacks Rank #4 or 5 (Sell rated) going into the earnings announcement, especially when the company is seeing negative estimate revisions.

Upcoming Releases

Let’s take a sneak peek into four technology companies that are set to report quarterly earnings on Jul 30:

Chegg  (CHGG - Free Report) is expected to gain from the rising popularity of online as well as on-demand human help for different courses at high school and college levels. The company’s strategy of delivering high-quality and low-cost educational services is another positive.

Strong top-line growth owing to higher contributions by Chegg Services is expected to translate into higher earnings this season, considering the relatively fixed cost structure.

Chegg stock has gained 80.1% year to date, substantially outperforming the 22.4% gain of the industry it belongs to. Chegg has a Zacks Rank #3 (Hold). (Read more: What's in the Cards for Chegg This Earnings Season?)



Instructure (INST - Free Report) provides cloud-based online education technology. Notably, the company surpassed the Zacks Consensus Estimate in each of the trailing four quarters with an average positive earnings surprise of 8.44%.

Instructure currently has a Zacks Rank #3 and an Earnings ESP of -2.82%.

The stock has gained 44.1% year to date, substantially outperforming the 22.4% rally of the industry it belongs to.



AppFolio (APPF - Free Report) provides cloud-based software solutions for property management and legal industries. Notably, the company surpassed the Zacks Consensus Estimate in each of the trailing four quarters with an average positive earnings surprise of 102.7%.

AppFolio currently has a Zacks Rank #3 and an Earnings ESP of 0.00%, which makes surprise prediction difficult.

The stock has gained 63.3% year to date, substantially outperforming the 22.4% rally of the industry it belongs to.


Sohu.com (SOHU - Free Report) is an online media search and game service group.

The company is expected to benefit from good performance of the Legacy TLBB mobile game along with increasing mobile search traffic.

However, decline in video ad sales is expected to hurt Sohu’s brand advertising business. Higher expenses also remain a drag on profitability.

Sohu.com currently has a Zacks Rank #3 and an Earnings ESP of 0.00%, which complicates our surprise prediction.

The stock has lost 27.5% year to date against the 4.9% rally of the industry it belongs to.


You can see the complete list of today’s Zacks #1 Rank stocks here.

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