For Immediate Release
Chicago, IL – March 25, 2019 – Zacks.com releases the list of companies likely to issue earnings surprises. This week’s list includes JPMorgan (JPM - Free Report) , Wells Fargo (WFC - Free Report) , Nike (NKE - Free Report) , Micron (MU - Free Report) and FedEx (FDX - Free Report) .
Soft Start to Q1 Earnings Season
We are still a few weeks away from the Q1 earnings season fully dominating the market’s attention. The period when earnings releases are in the spotlight lasts for about six weeks each calendar quarter, with the Q1 reporting cycle getting underway with the results from JPMorgan and Wells Fargo on April 12th.
But the bank earnings reports will not be the first of the Q1 earnings season, as the reporting cycle has actually gotten underway already. This includes the March 21st release from Nike that reported results for its fiscal quarter ending in February, we now have results from 11 such S&P 500 members. Micron and FedEx are some of the other index members that have come out with their fiscal quarters ending in
February, which we count as part of our March-quarter tally.
The fact is that by the time the big banks come around to report March-quarter results on April 12th, we will have seen Q1 results from almost two dozen S&P 500 members already.
The 11 S&P 500 members that have reported Q1 results are too small a number from which to draw any meaningful conclusions. That said, Q1 growth for these 11 index members is tracking notably below what we had seen in the recent past and positive revenue surprises also appear to be on the weak side, as the comparison charts below show.
In terms of Q1 scorecard, total earnings for these 11 S&P 500 members that have reported results are down -15.1% from the same period last year on +4.1% higher revenues, with 81.8% beating EPS estimates and 54.5% beating revenue estimates.
It is premature to draw any firm conclusions from this admittedly small sample of Q1 results. But it is nevertheless a weak showing from these 11 index members relative to other recent periods. In other words, we have made a soft start to this earnings season.
Expectations for 2019 Q1
The expectation is that earnings will actually decline in Q1, after many quarters of very strong growth. Growth got a huge boost last year from the tax-cut legislation, but it was fairly impressive in 2017 when there was no such support. If actual 2019 Q1 earnings growth turns out to be negative, it will be the first earnings decline since the second quarter of 2016.
Total earnings for the S&P 500 index are expected to be down -3.3% from the same period last year on +5% higher revenues. This would follow +14.4% earnings growth in 2018 Q4 and a quarterly growth pace that was roughly double the Q4 pace in the first three quarters of the year.
The overall tone and substance of management guidance during the last earnings season was on the negative side. This reflected a combination of slowing economic growth, particularly beyond the U.S., and rising input expenses. As a result, analysts steadily lowered their estimates for 2019 Q1 as well as full-year 2019
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