Friday, February 03, 2017

We feature the best research output of our analyst team in the Zacks Research Daily. In today’s write-up, we are featuring analyst reports on 16 major stocks, including reports on Facebook (FB), JPMorgan (JPM) and DuPont (DD). These stock research reports have been hand-picked from the 70 or so reports published by our analyst team today. You can see all of today’s research reports here >>

In addition to these stock research reports, we are also giving you a real-time scorecard of the ongoing Q4 earnings season. We take pride in closely monitoring each and every earnings report and presenting our analysis of emerging trends in the weekly Earnings Trends and Earnings Preview reports. Our latest Earnings Preview report is: 4 Things to Know About the Q4 Earnings Season

Q4 Earnings Scorecard (as of Friday, February 3rd)

We now have Q4 results from 275 S&P 500 members, or 55% of the index's total membership. With 84 index members on deck to report results next week, we will have seen Q4 results from 72% of the index's total membership by the end of next week.

Total earnings for the 275 index members that have reported results already are up +6.9% on +4.3% higher revenues, with 67.8% beating EPS estimates and 54.3% beating revenue estimates.

This is better earnings and revenue growth performance than we have seen from this group of 275 S&P 500 members in other recent periods, even after adjusting for the strong growth from the Finance sector (earnings growth would be +5.4% excluding the Finance sector on +4.2% higher revenues). The proportion of companies beating EPS and revenue estimates, however, is tracking below other recent periods. Only 39.5% of the index members are able to beat both EPS and revenue estimates, which compares to 50.9% in the preceding quarter for the same sample of 275 S&P 500 members.

Looking at Q4 as a whole, combining the actual results from the 275 index members with estimates from the still-to-come 225 companies, total earnings are expected to be up +6.8% from the same period last year on +3.8% higher revenues. This is the best earnings and revenue growth pace in two years. Importantly, the strong Q4 growth is not a function of easy comparisons, but rather a result of actual gains. The fact is total earnings for the S&P 500 index are on track to reach an all-time quarterly record, surpassing the level achieved in 2014 Q4.

The chart below shows the expected Q4 earnings tally for the index contrasted with what was actually earned in the preceding 8 quarters and what is expected to come in the following 4.

Estimates for the current period (2017 Q1) are holding up fairly well; they are coming down, but not at the pace as would typically expected. Total earnings for the index are currently expected to be up +8.3% in Q1, which is down from +10.3% on January 4th.

Today's Featured Research Reports

Buy rated JPMorgan shares have gained +31% over the past six months vs. +30.2% gain for the Major Banks industry. The company’s fourth-quarter earnings handily surpassed expectations, on the back of improved trading and mortgage banking fees. Also, a rise in net interest income along with lower operating expenses and credit costs supported the results. The company remains well positioned to benefit from the improved rate scenario and rising loan demand. Synergies from retail banking performance and cost-containment efforts will help improving its profitability, going forward. (You can read the full research report on JP Morgan here  >>)

Facebook shares lagged the S&P 500 index following the election, but have more than made up for that underperformance since the start of 2017 - the stock is up +14.1% in the year-to-date period vs. +1.7% gain for the index in that time period. The company’s fourth quarter adjusted earnings and revenues easily topped expectations driven by live video and mobile efforts. Despite strong results, Facebook, as expected, maintained a cautious stance on future growth prospects. However, apart from mobile and video, the monetization of its subsidiaries Instagram, Messenger, WhatsApp and Oculus, a huge user base and higher engagement levels will boost its financials, going ahead. The company is also dabbling in AR/VR and AI technologies, which also bode well for growth. (You can read the full research report on Facebook here >>)

DuPont shares have gained +28.9% over the one year vs. +27.2% gain for the Zacks Diversified Chemicals industry. DuPont’s earnings for fourth-quarter topped expectations on the back of strong cost controls. Revenues, however, fell year over year and missed expectations. DuPont is moving forward with its planned mega-merger with Dow Chemical, which is expected to create significant synergies. However, DuPont continues to face challenges in the agriculture business. Additionally, the company is exposed to currency headwinds and volatility in energy and raw material costs. (You can read the full research report on DuPont here >>)

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While we share the above news with the public, our sensitive recommendations are hidden from everyone but selected members. Would you like to peek behind the curtain and view them? Starting today, for the next month, you can follow all Zacks' private buys and sells in real time from value to momentum  . . . from stocks under $10 to ETF and option moves . . . from insider trades to companies that are about to report positive earnings surprises (we've called them with 80%+ accuracy). You can even look inside portfolios so exclusive that they are normally closed to new investors. Click here for Zacks' secret trades >>

Sheraz Mian

Director of Research

Note: Note: Sheraz Mian regularly provides earnings analysis on Zacks.com and appears frequently in the print and electronic media. His weekly earnings related articles include Earnings Trends and Earnings Preview. If you want an email notification each time Sheraz publishes a new article, please click here>>>