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JPMorgan, Costco, Levi Strauss, Wells Fargo and Goldman Sachs are part of Zacks Earnings Preview
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For Immediate Release
Chicago, IL – July 6, 2021 – Zacks.com releases the list of companies likely to issue earnings surprises. This week’s list includes JPMorgan Chase & Co. (JPM - Free Report) , Costco Wholesale Corporation (COST - Free Report) , Levi Strauss & Co. (LEVI - Free Report) , Wells Fargo & Company (WFC - Free Report) and The Goldman Sachs Group, Inc. (GS - Free Report) .
Durable Earnings Growth Expected
A big part of the unusually strong earnings growth expected in the Q2 earnings season is due to easy comparisons to last year’s Covid-hit period. But as we have been consistently pointing out, not all of the growth is a result of easy comparisons.
Total Q2 S&P 500 earnings are currently expected to be up +61.9% from the same period last year on +18.2% higher revenues. Estimates have steadily gone up in recent months, with the current +61.9% growth rate up from +50.6% at the start of the quarter on April 1st and +41.6% at the start of January.
Given how strong earnings surprises turned out to be in the preceding reporting cycle (2021 Q1), the final earnings growth tally for 2021 Q1 could be as high as +80%.
2021 Q2 at $394.8 billion is +61.9% above the Covid-hit $243.8 billion tally achieved in 2020 Q2. You can also see here that 2021 Q2 is +9.8% above the comparable pre-Covid 2019 period.
Please note the double-digit earnings growth expected in each of the next two years. This suggests that the market isn’t looking for a one-off rebound this year, but rather an enduring growth cycle that continues over the next couple of years.
To the extent that this growth outlook can improve as we move into the back half of 2021 will determine whether the overall earnings picture will continue to climb.
Key Reports This Week
The Q2 reporting cycle will really get going as JPMorgan and the other major banks come out with their fiscal June-quarter results on July 13th. But we (and other data aggregators) count the start of this and other earnings season(s) a little differently. From our standpoint, the Q2 reporting cycle got underway with companies reporting results for their fiscal quarters ending in May.
We have already seen such May-quarter results from 18 S&P 500 members, including Costco and others. We don’t have any index members on deck reporting results this holiday-shortened week, but there are a dozen or so non-index members that are reporting this week anyway, including bellwether operators like Levi Strauss & Co. and others.
We are off to a great start with the 18 S&P 500 members that have reported results already. Total earnings for these 18 companies are up +102.8% from the same period last year on +20.9% higher revenues, with 83.3% beating EPS estimates and 88.9% beating revenue estimates.
It is too early to draw any conclusions from this very small sample of results. But for what it’s worth, this is a better performance from these 18 index members than we have seen in the recent past.
Bank Industry Earnings Preview
The big banks will kick-start the Q2 reporting cycle for the Finance sector as JPMorgan, Wells Fargo and Goldman Sachs come out with Q2 results before the market’s open on July 13th. The year-over-year comparisons are particularly easy for these players, as they all reported big reserve additions in the 2020 period. But comparisons are expected to be tough for trading revenues, which got a huge boost from last year’s rebound from the March lows.
Wells Fargo isn’t much of a capital markets player, so trading volumes aren’t a factor in its results. But that will be an issue for Goldman and JPMorgan. Loan portfolios have been lackluster thus far and we will likely see a replay of that trend in the Q2 numbers. The market will be looking for management commentary on trends they see for the second half of the year with respect to credit demand from households as well as businesses.
The investment banking business remains red hot, though the easing of the ‘SPAC mania’ has likely weighed on IPO volumes in Q2. That said, the overall trend should remain strong.
Total Finance sector earnings are expected to be up +93.2% from the same period last year on +3%, which would follow the +98.3% earnings growth on +7.2% higher revenues in 2021 Q1. The sector’s 2020 Q2 earnings had dropped -45.2% on a year-over-year basis.
+1,500% Growth: One of 2021’s Most Exciting Investment Opportunities
In addition to the stocks you read about above, would you like to see Zacks’ top picks to capitalize on the Internet of Things (IoT)? It is one of the fastest-growing technologies in history, with an estimated 77 billion devices to be connected by 2025. That works out to 127 new devices per second.
Zacks has released a special report to help you capitalize on the Internet of Things’s exponential growth. It reveals 4 under-the-radar stocks that could be some of the most profitable holdings in your portfolio in 2021 and beyond.
Zacks Investment Research is under common control with affiliated entities (including a broker-dealer and an investment adviser), which may engage in transactions involving the foregoing securities for the clients of such affiliates.
Zacks.com provides investment resources and informs you of these resources, which you may choose to use in making your own investment decisions. Zacks is providing information on this resource to you subject to the Zacks "Terms and Conditions of Service" disclaimer. www.zacks.com/disclaimer.
Past performance is no guarantee of future results. Inherent in any investment is the potential for loss.This material is being provided for informational purposes only and nothing herein constitutes investment, legal, accounting or tax advice, or a recommendation to buy, sell or hold a security. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. It should not be assumed that any investments in securities, companies, sectors or markets identified and described were or will be profitable. All information is current as of the date of herein and is subject to change without notice. Any views or opinions expressed may not reflect those of the firm as a whole. Zacks Investment Research does not engage in investment banking, market making or asset management activities of any securities. These returns are from hypothetical portfolios consisting of stocks with Zacks Rank = 1 that were rebalanced monthly with zero transaction costs. These are not the returns of actual portfolios of stocks. The S&P 500 is an unmanaged index. Visit https://www.zacks.com/performance for information about the performance numbers displayed in this press release.
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JPMorgan, Costco, Levi Strauss, Wells Fargo and Goldman Sachs are part of Zacks Earnings Preview
For Immediate Release
Chicago, IL – July 6, 2021 – Zacks.com releases the list of companies likely to issue earnings surprises. This week’s list includes JPMorgan Chase & Co. (JPM - Free Report) , Costco Wholesale Corporation (COST - Free Report) , Levi Strauss & Co. (LEVI - Free Report) , Wells Fargo & Company (WFC - Free Report) and The Goldman Sachs Group, Inc. (GS - Free Report) .
Durable Earnings Growth Expected
A big part of the unusually strong earnings growth expected in the Q2 earnings season is due to easy comparisons to last year’s Covid-hit period. But as we have been consistently pointing out, not all of the growth is a result of easy comparisons.
Total Q2 S&P 500 earnings are currently expected to be up +61.9% from the same period last year on +18.2% higher revenues. Estimates have steadily gone up in recent months, with the current +61.9% growth rate up from +50.6% at the start of the quarter on April 1st and +41.6% at the start of January.
Given how strong earnings surprises turned out to be in the preceding reporting cycle (2021 Q1), the final earnings growth tally for 2021 Q1 could be as high as +80%.
2021 Q2 at $394.8 billion is +61.9% above the Covid-hit $243.8 billion tally achieved in 2020 Q2. You can also see here that 2021 Q2 is +9.8% above the comparable pre-Covid 2019 period.
Please note the double-digit earnings growth expected in each of the next two years. This suggests that the market isn’t looking for a one-off rebound this year, but rather an enduring growth cycle that continues over the next couple of years.
To the extent that this growth outlook can improve as we move into the back half of 2021 will determine whether the overall earnings picture will continue to climb.
Key Reports This Week
The Q2 reporting cycle will really get going as JPMorgan and the other major banks come out with their fiscal June-quarter results on July 13th. But we (and other data aggregators) count the start of this and other earnings season(s) a little differently. From our standpoint, the Q2 reporting cycle got underway with companies reporting results for their fiscal quarters ending in May.
We have already seen such May-quarter results from 18 S&P 500 members, including Costco and others. We don’t have any index members on deck reporting results this holiday-shortened week, but there are a dozen or so non-index members that are reporting this week anyway, including bellwether operators like Levi Strauss & Co. and others.
We are off to a great start with the 18 S&P 500 members that have reported results already. Total earnings for these 18 companies are up +102.8% from the same period last year on +20.9% higher revenues, with 83.3% beating EPS estimates and 88.9% beating revenue estimates.
It is too early to draw any conclusions from this very small sample of results. But for what it’s worth, this is a better performance from these 18 index members than we have seen in the recent past.
Bank Industry Earnings Preview
The big banks will kick-start the Q2 reporting cycle for the Finance sector as JPMorgan, Wells Fargo and Goldman Sachs come out with Q2 results before the market’s open on July 13th. The year-over-year comparisons are particularly easy for these players, as they all reported big reserve additions in the 2020 period. But comparisons are expected to be tough for trading revenues, which got a huge boost from last year’s rebound from the March lows.
Wells Fargo isn’t much of a capital markets player, so trading volumes aren’t a factor in its results. But that will be an issue for Goldman and JPMorgan. Loan portfolios have been lackluster thus far and we will likely see a replay of that trend in the Q2 numbers. The market will be looking for management commentary on trends they see for the second half of the year with respect to credit demand from households as well as businesses.
The investment banking business remains red hot, though the easing of the ‘SPAC mania’ has likely weighed on IPO volumes in Q2. That said, the overall trend should remain strong.
Total Finance sector earnings are expected to be up +93.2% from the same period last year on +3%, which would follow the +98.3% earnings growth on +7.2% higher revenues in 2021 Q1. The sector’s 2020 Q2 earnings had dropped -45.2% on a year-over-year basis.
For a detailed look at the overall earnings picture, including expectations for the coming periods, please check out our weekly Earnings Trends report >>>>Q2 Earnings Growth Reflects More than Easy Comparisons
+1,500% Growth: One of 2021’s Most Exciting Investment Opportunities
In addition to the stocks you read about above, would you like to see Zacks’ top picks to capitalize on the Internet of Things (IoT)? It is one of the fastest-growing technologies in history, with an estimated 77 billion devices to be connected by 2025. That works out to 127 new devices per second.
Zacks has released a special report to help you capitalize on the Internet of Things’s exponential growth. It reveals 4 under-the-radar stocks that could be some of the most profitable holdings in your portfolio in 2021 and beyond.
Click here to download this report FREE >>
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Zacks Investment Research is under common control with affiliated entities (including a broker-dealer and an investment adviser), which may engage in transactions involving the foregoing securities for the clients of such affiliates.
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Zacks.com provides investment resources and informs you of these resources, which you may choose to use in making your own investment decisions. Zacks is providing information on this resource to you subject to the Zacks "Terms and Conditions of Service" disclaimer. www.zacks.com/disclaimer.
Past performance is no guarantee of future results. Inherent in any investment is the potential for loss.This material is being provided for informational purposes only and nothing herein constitutes investment, legal, accounting or tax advice, or a recommendation to buy, sell or hold a security. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. It should not be assumed that any investments in securities, companies, sectors or markets identified and described were or will be profitable. All information is current as of the date of herein and is subject to change without notice. Any views or opinions expressed may not reflect those of the firm as a whole. Zacks Investment Research does not engage in investment banking, market making or asset management activities of any securities. These returns are from hypothetical portfolios consisting of stocks with Zacks Rank = 1 that were rebalanced monthly with zero transaction costs. These are not the returns of actual portfolios of stocks. The S&P 500 is an unmanaged index. Visit https://www.zacks.com/performance for information about the performance numbers displayed in this press release.