For Immediate Release
Chicago, IL – October 5, 2018 – Zacks.com releases the list of companies likely to issue earnings surprises. This week’s list includes Disney (DIS - Free Report) , Michael Kors (KORS - Free Report) , Ralph Lauren (RL - Free Report) and Eli Lilly (LLY - Free Report) .
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There is plenty to like in the picture emerging from the Q3 earnings season, the bulk of which is now behind us. The earnings and revenue growth pace is very impressive, with Q3 growth on track to be in the vicinity of the record level we saw in the first half of the year.
There is no shortage of strong and reassuring results from bellwether operators in a variety of sectors, but some areas of weakness have emerged as well, with companies struggling to beat revenue estimates and a number of leading companies providing underwhelming guidance. The guidance issue is a key component of the market’s ‘disappointment’ with the otherwise strong companies we’ve already seen report.
This weakness on the revenue and guidance fronts feeds into the narrative of skepticism about the longevity of the current economic cycle and earnings expectations for the coming periods. Many of the companies guiding lower have blamed some combination of rising input costs, the strong U.S. dollar, and moderating international economic growth. This has started showing up in estimates already.
Q3 Earnings Season Scorecard(as of Friday, November 2nd)
We now have Q3 results from 376 S&P 500 members or 75.2% of the index’s total membership that combined account for 81.2% of the index’s total market capitalization. Total earnings for these 376 companies are up +25.4% from the same period last year on +9.3% higher revenues, with 78.2% beating EPS estimates and 64.1% beating revenue estimates.
The proportion of these companies beating both EPS and revenue estimates is 53.7%.
Here are the four takeaways:
· Q3 earnings growth for these 376 index members at +25.4% represents an improvements of what we had seen from the same group of companies in other recent periods.
· Revenue growth for these 376 index members at +9.3% is tracking below what we had seen in the preceding period, but represents an improvement over other recent periods.
· EPS beats at 78.2% is below what we had seen from the same group of 376 index members in the preceding period, but is in-line with historical periods.
· Revenue beats at 64.1% is tracking below historical periods, as pointed out earlier.
We have a very busy reporting docket this week, with more than 1100 companies reporting Q3 results, including 77 S&P 500 members. The Retail sector is the only that still has a sizable number of reports still to come, though most of them aren’t on deck to report results this week. This week’s notable reports include Disney, Michael Kors, Ralph Lauren, Eli Lilly and others.
The Tech and Energy sectors have been in focus lately. For the Tech sector, we now have Q3 results from 82.7% of the sector’s total market cap in the S&P 500 index. Total earnings for these Tech companies are up +28.9% from the same period last year on +13.7% higher revenues, with 90.9% beating EPS estimates and 65.9% beating revenue estimates.
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