We use cookies to understand how you use our site and to improve your experience. This includes personalizing content and advertising. To learn more, click here. By continuing to use our site, you accept our use of cookies, revised Privacy Policy and Terms of Service.
You are being directed to ZacksTrade, a division of LBMZ Securities and licensed broker-dealer. ZacksTrade and Zacks.com are separate companies. The web link between the two companies is not a solicitation or offer to invest in a particular security or type of security. ZacksTrade does not endorse or adopt any particular investment strategy, any analyst opinion/rating/report or any approach to evaluating individual securities.
If you wish to go to ZacksTrade, click OK. If you do not, click Cancel.
The Q3 earnings season will take the spotlight when the big banks start reporting their quarterly results from October 11th onwards. However, we count the ‘official’ start of the Q3 reporting cycle much earlier, when companies with fiscal quarters ending in August come out with quarterly results.
The results in recent days from Oracle (ORCL - Free Report) and Adobe (ADBE - Free Report) fall in this category and, therefore, get counted as part of the overall 2024 Q3 earnings season tally. Of these two, the Oracle report was really impressive, with the company legitimately staking its claim as a notable player in the emerging artificial intelligence (AI) struggle.
The Adobe results were also fairly strong, with earnings increasing by +25.8% from the same period last year on +6.9% higher revenues, but the stock lost ground on the report due to underwhelming guidance.
Adobe shares were up big following the last quarterly release in June but were down in response to each of the three quarterly reports before that. Adobe shares are down -10.5% this year, lagging the Zacks Tech sector’s +18.9% gain and the S&P 500 index’s +17.1% gain.
Oracle shares’ favorable reaction to the September 9th report builds on the stock’s impressive momentum this year. The stock is now up +55.4% this year, handily outperforming the Tech sector and the broader market, with many in the market seeing the stock’s ongoing momentum as very much sustainable.
We have another 5 S&P 500 members on deck to report such August-quarter results this week, including Lennar LEN and FedEx FDX after the market’s close on Thursday, September 19th.
We discuss expectations for Lennar and the broader homebuilder space later in this note, but we first want to look at evolving earnings expectations for 2024 Q3 as a whole.
The Earnings Big Picture
Total Q3 earnings for the S&P 500 index are expected to be up +3.8% from the same period last year on +4.6% higher revenues. This would follow the +10% earnings growth for the index in the preceding period on +5.5% higher revenues.
Regular readers of our earnings commentary are familiar with our sanguine view on corporate profitability – the earnings picture isn’t great, but it isn’t bad either.
The one recent negative development on this front is the reversal of the earlier favorable revisions trend that we have regularly flagged in our commentary. This negative revisions trend is particularly notable concerning expectations for 2024 Q3, with earnings estimates for the period getting revised down much more than we had seen in other recent periods. You can see this in the chart below that tracks the evolution of Q3 earnings growth expectations over the last couple of months.
Image Source: Zacks Investment Research
Not only is the magnitude of cuts to Q3 estimates bigger than what we saw in the comparable periods for the last three quarters, but it is also widespread and not concentrated in one or a few sectors.
Of the 16 Zacks sectors, estimates have been revised down for 14 sectors, with the Transportation, Energy, Business Services, and Aerospace sectors suffering the biggest declines. The Tech and Finance sectors are the only sectors whose estimates have modestly risen since the period got underway.
The chart below shows the Q3 earnings and revenue growth expectations in the context of what we saw in actual results over the preceding four quarters and what is expected over the following three quarters.
Image Source: Zacks Investment Research
Notwithstanding the aforementioned negative revisions trend, the expectation is for an accelerating growth trend over the coming periods. Also, the aggregate earnings total for the period is expected to be a new all-time quarterly record, as the chart below shows.
Image Source: Zacks Investment Research
The chart below shows the overall earnings picture on a calendar-year basis, with the +8% earnings growth this year followed by double-digit gains in 2025 and 2026.
Image Source: Zacks Investment Research
Please note that this year’s +8% earnings growth improves to +9.7% on an ex-Energy basis.
Expectations for LEN and the Construction Sector
Lennar is expected to bring in $3.62 per share in earnings on $9.29 billion in revenues, representing year-over-year changes of -7.4% and +6.4%, respectively. Estimates have been under pressure lately, with the current $3.62 EPS estimate down -4% over the last three months.
Elevated interest rates have been a significant headwind for this interest-rate-sensitive business. As a result, the earnings outlook for Lennar and the broader homebuilder space has been under pressure ever since mortgage rates rose in response to Fed tightening. But with the central bank on the cusp of starting to ease policy, the outlook for the group has been steadily improving.
These hopes of a favorable interest rate backdrop in the days ahead have been helping Lennar and the stocks of other homebuilders gain ground lately. The chart below shows the performance of Lennar, the Zacks Construction sector, and the S&P 500 index over the last year.
Image Source: Zacks Investment Research
For 2024 Q3, total earnings for the Zacks Construction sector are expected to be down -3% on +3.7% higher revenues. This would follow the sector’s +5.6% earnings growth on +4.4% higher revenues.
For full-year 2024, total earnings for the Zacks Construction sector are expected to be up +1.1% from the 2023 level on +4.6% revenue growth. Earnings for the sector were down -6.5% in 2023, which followed +21.5% earnings growth in 2022 and +45% in 2021.
The chart below shows the sector’s aggregate earnings on an annual basis.
Image Source: Zacks Investment Research
As you can see above, the space’s profitability has bottomed already, with growth resuming from next year onwards.
For a detailed look at the overall earnings picture, including expectations for the coming periods, please check out our weekly Earnings Trends report >>>> What Will the Q3 Earnings Season Show?
See More Zacks Research for These Tickers
Normally $25 each - click below to receive one report FREE:
Image: Bigstock
Q3 Earnings: What Can Investors Expect?
The Q3 earnings season will take the spotlight when the big banks start reporting their quarterly results from October 11th onwards. However, we count the ‘official’ start of the Q3 reporting cycle much earlier, when companies with fiscal quarters ending in August come out with quarterly results.
The results in recent days from Oracle (ORCL - Free Report) and Adobe (ADBE - Free Report) fall in this category and, therefore, get counted as part of the overall 2024 Q3 earnings season tally. Of these two, the Oracle report was really impressive, with the company legitimately staking its claim as a notable player in the emerging artificial intelligence (AI) struggle.
The Adobe results were also fairly strong, with earnings increasing by +25.8% from the same period last year on +6.9% higher revenues, but the stock lost ground on the report due to underwhelming guidance.
Adobe shares were up big following the last quarterly release in June but were down in response to each of the three quarterly reports before that. Adobe shares are down -10.5% this year, lagging the Zacks Tech sector’s +18.9% gain and the S&P 500 index’s +17.1% gain.
Oracle shares’ favorable reaction to the September 9th report builds on the stock’s impressive momentum this year. The stock is now up +55.4% this year, handily outperforming the Tech sector and the broader market, with many in the market seeing the stock’s ongoing momentum as very much sustainable.
We have another 5 S&P 500 members on deck to report such August-quarter results this week, including Lennar LEN and FedEx FDX after the market’s close on Thursday, September 19th.
We discuss expectations for Lennar and the broader homebuilder space later in this note, but we first want to look at evolving earnings expectations for 2024 Q3 as a whole.
The Earnings Big Picture
Total Q3 earnings for the S&P 500 index are expected to be up +3.8% from the same period last year on +4.6% higher revenues. This would follow the +10% earnings growth for the index in the preceding period on +5.5% higher revenues.
Regular readers of our earnings commentary are familiar with our sanguine view on corporate profitability – the earnings picture isn’t great, but it isn’t bad either.
The one recent negative development on this front is the reversal of the earlier favorable revisions trend that we have regularly flagged in our commentary. This negative revisions trend is particularly notable concerning expectations for 2024 Q3, with earnings estimates for the period getting revised down much more than we had seen in other recent periods. You can see this in the chart below that tracks the evolution of Q3 earnings growth expectations over the last couple of months.
Image Source: Zacks Investment Research
Not only is the magnitude of cuts to Q3 estimates bigger than what we saw in the comparable periods for the last three quarters, but it is also widespread and not concentrated in one or a few sectors.
Of the 16 Zacks sectors, estimates have been revised down for 14 sectors, with the Transportation, Energy, Business Services, and Aerospace sectors suffering the biggest declines. The Tech and Finance sectors are the only sectors whose estimates have modestly risen since the period got underway.
The chart below shows the Q3 earnings and revenue growth expectations in the context of what we saw in actual results over the preceding four quarters and what is expected over the following three quarters.
Image Source: Zacks Investment Research
Notwithstanding the aforementioned negative revisions trend, the expectation is for an accelerating growth trend over the coming periods. Also, the aggregate earnings total for the period is expected to be a new all-time quarterly record, as the chart below shows.
Image Source: Zacks Investment Research
The chart below shows the overall earnings picture on a calendar-year basis, with the +8% earnings growth this year followed by double-digit gains in 2025 and 2026.
Image Source: Zacks Investment Research
Please note that this year’s +8% earnings growth improves to +9.7% on an ex-Energy basis.
Expectations for LEN and the Construction Sector
Lennar is expected to bring in $3.62 per share in earnings on $9.29 billion in revenues, representing year-over-year changes of -7.4% and +6.4%, respectively. Estimates have been under pressure lately, with the current $3.62 EPS estimate down -4% over the last three months.
Elevated interest rates have been a significant headwind for this interest-rate-sensitive business. As a result, the earnings outlook for Lennar and the broader homebuilder space has been under pressure ever since mortgage rates rose in response to Fed tightening. But with the central bank on the cusp of starting to ease policy, the outlook for the group has been steadily improving.
These hopes of a favorable interest rate backdrop in the days ahead have been helping Lennar and the stocks of other homebuilders gain ground lately. The chart below shows the performance of Lennar, the Zacks Construction sector, and the S&P 500 index over the last year.
Image Source: Zacks Investment Research
For 2024 Q3, total earnings for the Zacks Construction sector are expected to be down -3% on +3.7% higher revenues. This would follow the sector’s +5.6% earnings growth on +4.4% higher revenues.
For full-year 2024, total earnings for the Zacks Construction sector are expected to be up +1.1% from the 2023 level on +4.6% revenue growth. Earnings for the sector were down -6.5% in 2023, which followed +21.5% earnings growth in 2022 and +45% in 2021.
The chart below shows the sector’s aggregate earnings on an annual basis.
Image Source: Zacks Investment Research
As you can see above, the space’s profitability has bottomed already, with growth resuming from next year onwards.
For a detailed look at the overall earnings picture, including expectations for the coming periods, please check out our weekly Earnings Trends report >>>> What Will the Q3 Earnings Season Show?