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Handicapping Q3 Earnings Season
The 16 S&P 500 members that have reported quarterly results over the last two weeks for their fiscal August-ending quarter form part of our Q3 earnings season tally. We have another 20 companies on deck to report results this week, including 7 S&P 500 members. As such, the Q3 earnings season has gotten underway already, but the market will start paying attention to the reporting cycle the week of October 9th when the big banks start coming out with quarterly results.
This week’s notable earnings reports include:
Lennar (NYSE: (LEN - Free Report) – Free Report) – Lennar shares are expected to report results before the market’s open on Tuesday, October 3rd, with the homebuilder expected to earn $1.01 per share on $3.22 billion in revenues. Earnings per share for the quarter will be unchanged from the year-earlier period though revenues would be up +13.6% from the same period last year.
This Miami, Florida-based homebuilder has been literally in the eye of the storm lately, and the impact showed up in its mid-September pre-announcement. As a result, estimates have come down recently, though most of the negative revisions pertain to the coming quarter (hurricane impact) while estimates for 2018 have been trending up.
Lennar shares have been strong performers this year, with the stock up +21.6% in the year-to-date period vs. the +13.5% gain for the Zacks Construction sector and the +12.1% gain for the S&P 500 index. We should keep in mind, however, that all of the stock’s gain this year had taken place through early March, with the stock essentially flat since then.
Pepsi (NYSE: (PEP - Free Report) – Free Report) – Pepsi reports quarterly results before the market’s open on Wednesday, October 4th, with the company expected to earn $1.42 per share on $16.4 billion in revenues, representing year-over-year gains of +1.5% and +2.4%, respectively.
The stock has been struggling since mid-August and is currently up +6.5% for the year, underperforming Coke’s+8.5% gain and the S&P 500’s +12.1% gain. Weakness in the company’s international business, particularly the Asia, Middle East & North Africa (AMENA) segment has been a drag in recent quarters, offsetting continued momentum in the Frito Lay North America business.
The carbonated beverage business has been struggling over the last couple of years, an issue that Pepsi shares with Coke, but the stock’s near-term momentum will reflect results from the international business and management’s commentary about the outlook.
Costco (Nasdaq: (COST - Free Report) – Free Report) – Costco reports results after the market’s close on Thursday, October 5th, with the retail giant expected to post $2.01 in EPS on $41.7 billion in revenues, up +13.8% and +14.2% from the year-earlier level, respectively. The revisions trend has been positive, with the current consensus EPS estimate for the quarter modestly up since the start of the period.
The stock has been on an uncharacteristic rollercoaster ride this year and down big since mid-June following the Amazon – Whole Foods deal. The stock is currently up +3% this year, underperforming the broader market (up +12.1%) as well Wal-Mart – up +13.5%).
Total Q3 earnings are expected to be up +3.2% from the same period last year on +5% higher revenues. This would follow +11.1% earnings growth in 2017 Q2 on +5.5%, the second quarter in a row of double-digit earnings growth.
Estimates for Q3 came down as the quarter unfolded, with the current +3.2% growth down from +6.3% at the end of June.
About Zacks
Zacks.com is a property of Zacks Investment Research, Inc., which was formed in 1978. The later formation of the Zacks Rank, a proprietary stock picking system; continues to outperform the market by nearly a 3 to 1 margin. The best way to unlock the profitable stock recommendations and market insights of Zacks Investment Research is through our free daily email newsletter; Profit from the Pros. In short, it's your steady flow of Profitable ideas GUARANTEED to be worth your time!Register for your free subscription to Profit from the Pros.
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/performancefor information about the performance numbers displayed in this press release.
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Lennar, Pepsi , Costco, Constellation Brands and Yum China are part of Zacks Earnings Preview
For Immediate Release
Chicago, IL – October 2, 2017 – Zacks.com releases the list of companies likely to issue earnings surprises. This week’s list includes Lennar (NYSE: (LEN - Free Report) – Free Report), Pepsi (NYSE: (PEP - Free Report) – Free Report), Costco (Nasdaq: (COST - Free Report) – Free Report), Constellation Brands (NYSE: (STZ - Free Report) – Free Report) and Yum China (NYSE: (YUMC - Free Report) – Free Report).
To see more earnings analysis, visit https://at.zacks.com/?id=3207.
Every day, Zacks.com makes their Bull Stock of the Day available, free of charge. To see it, click here.
Handicapping Q3 Earnings Season
The 16 S&P 500 members that have reported quarterly results over the last two weeks for their fiscal August-ending quarter form part of our Q3 earnings season tally. We have another 20 companies on deck to report results this week, including 7 S&P 500 members. As such, the Q3 earnings season has gotten underway already, but the market will start paying attention to the reporting cycle the week of October 9th when the big banks start coming out with quarterly results.
This week’s notable earnings reports include:
Lennar (NYSE: (LEN - Free Report) – Free Report) – Lennar shares are expected to report results before the market’s open on Tuesday, October 3rd, with the homebuilder expected to earn $1.01 per share on $3.22 billion in revenues. Earnings per share for the quarter will be unchanged from the year-earlier period though revenues would be up +13.6% from the same period last year.
This Miami, Florida-based homebuilder has been literally in the eye of the storm lately, and the impact showed up in its mid-September pre-announcement. As a result, estimates have come down recently, though most of the negative revisions pertain to the coming quarter (hurricane impact) while estimates for 2018 have been trending up.
Lennar shares have been strong performers this year, with the stock up +21.6% in the year-to-date period vs. the +13.5% gain for the Zacks Construction sector and the +12.1% gain for the S&P 500 index. We should keep in mind, however, that all of the stock’s gain this year had taken place through early March, with the stock essentially flat since then.
Pepsi (NYSE: (PEP - Free Report) – Free Report) – Pepsi reports quarterly results before the market’s open on Wednesday, October 4th, with the company expected to earn $1.42 per share on $16.4 billion in revenues, representing year-over-year gains of +1.5% and +2.4%, respectively.
The stock has been struggling since mid-August and is currently up +6.5% for the year, underperforming Coke’s+8.5% gain and the S&P 500’s +12.1% gain. Weakness in the company’s international business, particularly the Asia, Middle East & North Africa (AMENA) segment has been a drag in recent quarters, offsetting continued momentum in the Frito Lay North America business.
The carbonated beverage business has been struggling over the last couple of years, an issue that Pepsi shares with Coke, but the stock’s near-term momentum will reflect results from the international business and management’s commentary about the outlook.
Costco (Nasdaq: (COST - Free Report) – Free Report) – Costco reports results after the market’s close on Thursday, October 5th, with the retail giant expected to post $2.01 in EPS on $41.7 billion in revenues, up +13.8% and +14.2% from the year-earlier level, respectively. The revisions trend has been positive, with the current consensus EPS estimate for the quarter modestly up since the start of the period.
The stock has been on an uncharacteristic rollercoaster ride this year and down big since mid-June following the Amazon – Whole Foods deal. The stock is currently up +3% this year, underperforming the broader market (up +12.1%) as well Wal-Mart – up +13.5%).
Other notable companies this week include Constellation Brands (NYSE: (STZ - Free Report) – Free Report) and Yum China (NYSE: (YUMC - Free Report) – Free Report).
Expectations for Q3
Total Q3 earnings are expected to be up +3.2% from the same period last year on +5% higher revenues. This would follow +11.1% earnings growth in 2017 Q2 on +5.5%, the second quarter in a row of double-digit earnings growth.
Estimates for Q3 came down as the quarter unfolded, with the current +3.2% growth down from +6.3% at the end of June.
About Zacks
Zacks.com is a property of Zacks Investment Research, Inc., which was formed in 1978. The later formation of the Zacks Rank, a proprietary stock picking system; continues to outperform the market by nearly a 3 to 1 margin. The best way to unlock the profitable stock recommendations and market insights of Zacks Investment Research is through our free daily email newsletter; Profit from the Pros. In short, it's your steady flow of Profitable ideas GUARANTEED to be worth your time!Register for your free subscription to Profit from the Pros.
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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/performancefor information about the performance numbers displayed in this press release.