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Amazon, Facebook, Boeing, Caterpillar and 3M are part of Zacks Earnings Preview

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For Immediate Release

Chicago, IL –July 22, 2019 – releases the list of companies likely to issue earnings surprises. This week’s list includes Amazon (AMZN - Free Report) , Facebook (FB - Free Report) , Boeing (BA - Free Report) , Caterpillar (CAT - Free Report) and 3M (MMM - Free Report) .

3 Takeaways from Q2 Earnings Results Thus Far

It is hard to draw any firm conclusions from the June-quarter earnings results that we have seen already. But we do find the absence of major negative surprises at this stage as reassuring and generally favorable.

The trade overhang is unsurprisingly getting referenced on many earnings calls, but we aren’t seeing across the board negative guidance. This may change in the coming days as the reporting docket expands beyond the Finance sector which has a heavy presence in the results thus far.

Having seen results from 79 S&P 500 members or 15.8% of the index’s total membership through Friday, July 19th, we will call the results thus far as good and reassuring enough.

We get into the heart of the reporting season this week, with almost 580 companies reporting results, including 136 S&P 500 members. This week’s reporting docket is comprised of a representative cross section of the index, ranging from Amazon and Facebook to Boeing, Caterpillar and 3M. The table below shows the notable companies reporting results this week.

Here are the key takeaways from the Q2 earnings season after seeing results from 79 S&P 500 members through Friday, July 19th.

First, no major surprises on the growth front, which we knew will be anemic. We should keep in mind however that the growth challenge is more a function of tough comparisons to last year’s record results than a cyclical downturn in profitability.

Total earnings for the 79 index members that have reported are up +2.6% from the same period last year on +2.9% higher revenues. Earnings and revenue growth for the same cohort of companies had been +1.7% and +3.1% in the preceding earnings season, respectively.

This anemic growth pace is expected to persist through the current period as well, as we will show a little later.

Second, most companies are comfortably beating EPS and revenue estimates.

For the 79 index members that have reported results already, 79.7% are beating EPS estimates and 60.8% are beating revenue estimates. For the same cohort of companies, the proportion of positive EPS and revenue surprises was 79.7% and 55.7% in the Q1 earnings season.

It is reassuring to see companies doing better on the revenues side relative to the unusually weak showing on this front in Q1.

A preponderance of positive surprises isn’t typically a big deal, since it implies that estimates were likely too low. The thing we do know is that estimates for the June quarter had not dropped as much ahead of the start of the reporting period by as had been the case in other recent periods. In other words, one could argue that Q2 estimates were not low, which makes the above-average proportion of positive surprises relatively significant.

We should keep in mind that it is still relatively early and this trend could change as move into the heart of the Q2 earnings season this week and beyond.

Third, estimates for 2019 Q3 are coming down more than what we saw in the comparable period for the June quarter.

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