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Zacks Earnings Trends Highlights: ExxonMobil and Chevron
Read MoreHide Full Article
For Immediate Release
Chicago, IL – Dec 20, 2017 – Zacks Director of Research Sheraz Mian says, "For Q4 as a whole, total earnings are expected to be up +8.6% from the same period last year on +6.8% higher revenues."
What Will Q4 Earnings Season Bring?
Note: The following is an excerpt from this week’s Earnings Trends report. You can access the full report that contains detailed historical actual and estimates for the current and following periods, please click here>>>
Here are the key points:
• We are a couple of weeks away from the Q4 earnings season taking the spotlight when the major banks come out with results, but the quarterly reporting cycle has gotten underway already, with results from 6 S&P 500 members already out.
• It is too early to draw any conclusions from these early results, but it is nevertheless a good start.
• For the Q4 as a whole, total earnings are expected to be up +8.6% from the same period last year on +6.8% higher revenues. The revisions trend for Q4 estimates has been very favorable, with earnings estimates holding up a lot better relative to other comparable periods.
• Earnings growth is expected to be positive for 13 of the 16 Zacks sectors, with double-digit growth for the Energy, Technology, Construction, Industrial Products, Basic Materials and Autos sectors.
• Q4 earnings growth for the Energy sector is the highest of all sectors, with total earnings for the sector expected to be up +168.4% from the same period last year on +23.5% higher revenues. Excluding the Energy sector, total Q4 earnings for the rest of the S&P 500 index would be up +6%.
• Earnings growth is expected to be strong for the Technology sector, with total Q4 earnings for the sector expected to be up +13.5% on +8.4% higher revenues. Finance sector earnings are expected to be up +3.9% on +2.3% year-over-year growth in revenues.
• Earnings growth is expected to be negative for three sectors in Q4 – Consumer Discretionary, Conglomerates and Transportation.
• For full-year 2017, total earnings for the S&P 500 index are expected to be up +7.5% on +5% higher revenues, which would follow +0.7% earnings growth on +2.2% higher revenues in 2016. Index earnings are expected to be up +11.8% in 2018 and +9.7% in 2019.
• Earnings expectations do not reflect any tax law changes at this stage. Given the direct and indirect favorable impact of tax cuts on corporate profitability, estimates will most likely be going up following the enactment of the legislation.
The revisions trend for the Q4 earnings season has been unusually favorable since the quarter got underway.
This revisions trend is the most notable positive development on the estimate revisions front in recent years. Q4 estimates for 9 of the 16 Zacks sectors have come down since the start of the quarter, with estimates for the remaining 6 sectors going up (construction is flat). The strongest gains have been in the Energy, Industrial Products, Basic Materials and Technology sectors. The positive Energy sector earnings revisions reflect developments in oil prices, which have started showing in EPS estimates for ExxonMobil (XOM - Free Report) , Chevron (CVX - Free Report) and others.
Unlike the year-over-year growth pace, the dollar amount of total earnings is on track to reach a new all-time quarterly record.
Please note that the June quarter tally in the chart above was a new all-time quarterly record for the large-cap index. But it will get easily surpassed in Q4 and the coming quarters.
Stepping back from the quarterly picture and looking at the growth trajectory on an annual basis, earnings growth resumed in 2017 after flat-lining in the preceding two years, with total S&P 500 earnings on track to increase +7.5% this year on +5% higher revenues. But the growth pace is expected to accelerate in 2018 and 2019, with total earnings for the index expected to be increase +11.8% and +9.7%, respectively.
Please note that these estimates do not incorporate any tax law changes, which will have a material positive impact on estimates once enacted. In other words, it is reasonable to expect these estimates to go up once the legislation gets signed into law.
A big drag on earnings growth in the preceding two years was the sharp decline in oil prices and the impact that had on the aggregate earnings picture. The improvement we are seeing in the Energy sector’s earnings picture this year is a big reason for the aggregate growth resumption, with the 2017 earnings growth for the S&P 500 index dropping to +4.8% from +7.5% on an ex-Energy basis.
But there is plenty of growth this year beyond the Energy sector, with the Technology and Finance sectors as the main contributors after the Energy sector. The Energy sector’s growth contribution drops materially in 2018, with the Technology and Finance sectors taking back the leadership roles.
Note: Sheraz Mian manages the Zacks equity research department. He is an acknowledged earnings expert whose commentaries and analyses appear on Zacks.com and in the print and electronic media. His weekly earnings related articles include Earnings Trendsand Earnings Preview. He manages the Zacks Top 10 and Focus List portfolios and writes the Weekly Market Analysis article for Zacks Premium subscribers.
Zacks Editor-in-Chief Goes "All In" on This Stock
Full disclosure, Kevin Matras now has more of his own money in one particular stock than in any other. He believes in its short-term profit potential and also in its prospects to more than double by 2019. Today he reveals and explains his surprising move in a new Special Report.
Note: Sheraz Mian manages the Zacks equity research department. He is an acknowledged earnings expert whose commentaries and analyses appear on Zacks.com and in the print and electronic media. His weekly earnings related articles include Earnings Trends and Earnings Preview. He manages the Zacks Top 10 and Focus List portfolios and writes the Weekly Market Analysis article for Zacks Premium subscribers.
If you want an email notification each time Sheraz Mian publishes a new article, pleaseclick here>>>
About Zacks Equity Research
Zacks Equity Research provides the best of quantitative and qualitative analysis to help investors know what stocks to buy and which to sell for the long-term.
Continuous analyst coverage is provided for a universe of 1,150 publicly traded stocks. Our analysts are organized by industry which gives them keen insights to developments that affect company profits and stock performance. Recommendations and target prices are six-month time horizons.
Strong Stocks that Should Be in the News
Many are little publicized and fly under the Wall Street radar. They're virtually unknown to the general public. Yet today's 220 Zacks Rank #1 "Strong Buys" were generated by the stock-picking system that has nearly tripled the market from 1988 through 2015. Its average gain has been a stellar +26% per year. See these high-potential stocks free >>
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.
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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Zacks Earnings Trends Highlights: ExxonMobil and Chevron
For Immediate Release
Chicago, IL – Dec 20, 2017 – Zacks Director of Research Sheraz Mian says, "For Q4 as a whole, total earnings are expected to be up +8.6% from the same period last year on +6.8% higher revenues."
What Will Q4 Earnings Season Bring?
Note: The following is an excerpt from this week’s Earnings Trends report. You can access the full report that contains detailed historical actual and estimates for the current and following periods, please click here>>>
Here are the key points:
• We are a couple of weeks away from the Q4 earnings season taking the spotlight when the major banks come out with results, but the quarterly reporting cycle has gotten underway already, with results from 6 S&P 500 members already out.
• It is too early to draw any conclusions from these early results, but it is nevertheless a good start.
• For the Q4 as a whole, total earnings are expected to be up +8.6% from the same period last year on +6.8% higher revenues. The revisions trend for Q4 estimates has been very favorable, with earnings estimates holding up a lot better relative to other comparable periods.
• Earnings growth is expected to be positive for 13 of the 16 Zacks sectors, with double-digit growth for the Energy, Technology, Construction, Industrial Products, Basic Materials and Autos sectors.
• Q4 earnings growth for the Energy sector is the highest of all sectors, with total earnings for the sector expected to be up +168.4% from the same period last year on +23.5% higher revenues. Excluding the Energy sector, total Q4 earnings for the rest of the S&P 500 index would be up +6%.
• Earnings growth is expected to be strong for the Technology sector, with total Q4 earnings for the sector expected to be up +13.5% on +8.4% higher revenues. Finance sector earnings are expected to be up +3.9% on +2.3% year-over-year growth in revenues.
• Earnings growth is expected to be negative for three sectors in Q4 – Consumer Discretionary, Conglomerates and Transportation.
• For full-year 2017, total earnings for the S&P 500 index are expected to be up +7.5% on +5% higher revenues, which would follow +0.7% earnings growth on +2.2% higher revenues in 2016. Index earnings are expected to be up +11.8% in 2018 and +9.7% in 2019.
• Earnings expectations do not reflect any tax law changes at this stage. Given the direct and indirect favorable impact of tax cuts on corporate profitability, estimates will most likely be going up following the enactment of the legislation.
The revisions trend for the Q4 earnings season has been unusually favorable since the quarter got underway.
This revisions trend is the most notable positive development on the estimate revisions front in recent years. Q4 estimates for 9 of the 16 Zacks sectors have come down since the start of the quarter, with estimates for the remaining 6 sectors going up (construction is flat). The strongest gains have been in the Energy, Industrial Products, Basic Materials and Technology sectors. The positive Energy sector earnings revisions reflect developments in oil prices, which have started showing in EPS estimates for ExxonMobil (XOM - Free Report) , Chevron (CVX - Free Report) and others.
Unlike the year-over-year growth pace, the dollar amount of total earnings is on track to reach a new all-time quarterly record.
Please note that the June quarter tally in the chart above was a new all-time quarterly record for the large-cap index. But it will get easily surpassed in Q4 and the coming quarters.
Stepping back from the quarterly picture and looking at the growth trajectory on an annual basis, earnings growth resumed in 2017 after flat-lining in the preceding two years, with total S&P 500 earnings on track to increase +7.5% this year on +5% higher revenues. But the growth pace is expected to accelerate in 2018 and 2019, with total earnings for the index expected to be increase +11.8% and +9.7%, respectively.
Please note that these estimates do not incorporate any tax law changes, which will have a material positive impact on estimates once enacted. In other words, it is reasonable to expect these estimates to go up once the legislation gets signed into law.
A big drag on earnings growth in the preceding two years was the sharp decline in oil prices and the impact that had on the aggregate earnings picture. The improvement we are seeing in the Energy sector’s earnings picture this year is a big reason for the aggregate growth resumption, with the 2017 earnings growth for the S&P 500 index dropping to +4.8% from +7.5% on an ex-Energy basis.
But there is plenty of growth this year beyond the Energy sector, with the Technology and Finance sectors as the main contributors after the Energy sector. The Energy sector’s growth contribution drops materially in 2018, with the Technology and Finance sectors taking back the leadership roles.
Note: Sheraz Mian manages the Zacks equity research department. He is an acknowledged earnings expert whose commentaries and analyses appear on Zacks.com and in the print and electronic media. His weekly earnings related articles include Earnings Trends and Earnings Preview. He manages the Zacks Top 10 and Focus List portfolios and writes the Weekly Market Analysis article for Zacks Premium subscribers.
Zacks Editor-in-Chief Goes "All In" on This Stock
Full disclosure, Kevin Matras now has more of his own money in one particular stock than in any other. He believes in its short-term profit potential and also in its prospects to more than double by 2019. Today he reveals and explains his surprising move in a new Special Report.
Download it free >>
Note: Sheraz Mian manages the Zacks equity research department. He is an acknowledged earnings expert whose commentaries and analyses appear on Zacks.com and in the print and electronic media. His weekly earnings related articles include Earnings Trends and Earnings Preview. He manages the Zacks Top 10 and Focus List portfolios and writes the Weekly Market Analysis article for Zacks Premium subscribers.
If you want an email notification each time Sheraz Mian publishes a new article, please click here>>>
About Zacks Equity Research
Zacks Equity Research provides the best of quantitative and qualitative analysis to help investors know what stocks to buy and which to sell for the long-term.
Continuous analyst coverage is provided for a universe of 1,150 publicly traded stocks. Our analysts are organized by industry which gives them keen insights to developments that affect company profits and stock performance. Recommendations and target prices are six-month time horizons.
Strong Stocks that Should Be in the News
Many are little publicized and fly under the Wall Street radar. They're virtually unknown to the general public. Yet today's 220 Zacks Rank #1 "Strong Buys" were generated by the stock-picking system that has nearly tripled the market from 1988 through 2015. Its average gain has been a stellar +26% per year. See these high-potential stocks free >>
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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.