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Zacks Earnings Trends Highlights: Nvidia, Amazon, Alphabet and Facebook
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For Immediate Release
Chicago, IL – November 29, 2018 – Zacks Director of Research Sheraz Mian says, “Total earnings for the 488 of the S&P 500 companies already reported are up +25.5% from the same period last year on +8.4% higher revenues, with 78.7% beating EPS estimates and 64.3% beating revenue estimates.”
Q3 Earnings Scorecard
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:
The Q3 earnings season is now effectively behind us, with results from 488 S&P 500 members out already. Total earnings for these companies are up +25.5% from the same period last year on +8.4% higher revenues, with 78.7% beating EPS estimates and 64.3% beating revenue estimates.
This is better earnings growth than what we have seen from this group of companies in other recent periods, though revenue growth represents a deceleration relative to the recent past. Positive EPS surprises are about in-line with historical periods for earnings, but materially on the lower side for revenues.
Looking at Q3 as a whole, total earnings for the index are expected to be up +25.4% from the same period last year on +8.3% higher revenues, the 6th time in the last 7 quarters of double-digit earnings growth. The overall earnings picture remains solid, though some pockets of weakness have showed up.
For the small-cap S&P 600 index, we now have Q3 results from 561 index members or 93.3% of its members. Total earnings for these small-cap companies are up +36.3% on +7.4% higher revenues, with 59% beating EPS estimates and 62% beating revenue estimates.
For the small-cap index as a whole, total Q3 earnings are expected to be up +33.9% from the same period last year on +7.1% higher revenues. The Finance sector, which is an even bigger earnings contributor to the small-cap index compared to the S&P 500 index, is expected to see +36.8% higher earnings on +7.1% higher revenues.
Estimates for the current period (2018 Q4) have been coming down, with the current +12.9% earnings growth expected for the period down from +15.9% at the start of the quarter. Estimates have come down for all 16 Zacks sectors, with the biggest cuts in the Conglomerates, Construction, Consumer Discretionary, and Utilities sectors.
For full-year 2018, total earnings for the S&P 500 index are expected to be up +20.9% on +6.7% higher revenues. For full-year 2019, total earnings are expected to be up +8.3% on +5.4% higher revenues, with 2019 estimates steadily coming down.
The implied ‘EPS’ for the index, calculated using current 2018 P/E of 16.9X and index close, as of November 27th, is $158.29. Using the same methodology, the index ‘EPS’ works out to $171.40 for 2019 (P/E of 15.6X) and $188.23 for 2020 (P/E of 14.2X). The multiples for 2018, 2019 and 2020 have been calculated using the index’s total market cap and aggregate bottom-up earnings for each year.
The Q3 earnings season has come to an end for 11 of the 16 Zacks sectors, with the bulk of the results out for the remaining sectors as well. Here are the three takeaways from this reporting cycle.
First, while Q3 earnings growth turned out to be as strong as we saw in the first half of the year, revenue growth has decelerated modestly.
If we look at Q3 as a whole by combining the actual results for the 488 index members with estimates for the still-to-come companies, total earnings for the quarter are expected to be up +25.4% from the same period last year on +8.3% higher revenues. This would compare to +25.4% earnings growth in 2018 Q2 and +24.6% in 2018 Q1.
Second, positive revenue surprises have not been as numerous in the Q3 earnings season as has typically been the trend in other recent periods.
The 64.3% revenues beats proportion in Q3 is the lowest that we have seen for this group of 488 index members since the fourth quarter of 2016, with even top-line bellwethers like Nvidia (NVDA - Free Report) , Amazon (AMZN - Free Report) , Alphabet (GOOGL - Free Report) and Facebook coming up short on this count.
Third, some chinks have started showing up in the overall corporate earnings picture, with a number of industry leaders guiding lower due to factors like the impact of the strong U.S. dollar, cost inflation (particularly freight) and trade tariffs. Questions about the international economic growth backdrop represents an additional headwind to corporate earnings.
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: Nvidia, Amazon, Alphabet and Facebook
For Immediate Release
Chicago, IL – November 29, 2018 – Zacks Director of Research Sheraz Mian says, “Total earnings for the 488 of the S&P 500 companies already reported are up +25.5% from the same period last year on +8.4% higher revenues, with 78.7% beating EPS estimates and 64.3% beating revenue estimates.”
Q3 Earnings Scorecard
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:
The Q3 earnings season is now effectively behind us, with results from 488 S&P 500 members out already. Total earnings for these companies are up +25.5% from the same period last year on +8.4% higher revenues, with 78.7% beating EPS estimates and 64.3% beating revenue estimates.
This is better earnings growth than what we have seen from this group of companies in other recent periods, though revenue growth represents a deceleration relative to the recent past. Positive EPS surprises are about in-line with historical periods for earnings, but materially on the lower side for revenues.
Looking at Q3 as a whole, total earnings for the index are expected to be up +25.4% from the same period last year on +8.3% higher revenues, the 6th time in the last 7 quarters of double-digit earnings growth. The overall earnings picture remains solid, though some pockets of weakness have showed up.
For the small-cap S&P 600 index, we now have Q3 results from 561 index members or 93.3% of its members. Total earnings for these small-cap companies are up +36.3% on +7.4% higher revenues, with 59% beating EPS estimates and 62% beating revenue estimates.
For the small-cap index as a whole, total Q3 earnings are expected to be up +33.9% from the same period last year on +7.1% higher revenues. The Finance sector, which is an even bigger earnings contributor to the small-cap index compared to the S&P 500 index, is expected to see +36.8% higher earnings on +7.1% higher revenues.
Estimates for the current period (2018 Q4) have been coming down, with the current +12.9% earnings growth expected for the period down from +15.9% at the start of the quarter. Estimates have come down for all 16 Zacks sectors, with the biggest cuts in the Conglomerates, Construction, Consumer Discretionary, and Utilities sectors.
For full-year 2018, total earnings for the S&P 500 index are expected to be up +20.9% on +6.7% higher revenues. For full-year 2019, total earnings are expected to be up +8.3% on +5.4% higher revenues, with 2019 estimates steadily coming down.
The implied ‘EPS’ for the index, calculated using current 2018 P/E of 16.9X and index close, as of November 27th, is $158.29. Using the same methodology, the index ‘EPS’ works out to $171.40 for 2019 (P/E of 15.6X) and $188.23 for 2020 (P/E of 14.2X). The multiples for 2018, 2019 and 2020 have been calculated using the index’s total market cap and aggregate bottom-up earnings for each year.
The Q3 earnings season has come to an end for 11 of the 16 Zacks sectors, with the bulk of the results out for the remaining sectors as well. Here are the three takeaways from this reporting cycle.
First, while Q3 earnings growth turned out to be as strong as we saw in the first half of the year, revenue growth has decelerated modestly.
If we look at Q3 as a whole by combining the actual results for the 488 index members with estimates for the still-to-come companies, total earnings for the quarter are expected to be up +25.4% from the same period last year on +8.3% higher revenues. This would compare to +25.4% earnings growth in 2018 Q2 and +24.6% in 2018 Q1.
Second, positive revenue surprises have not been as numerous in the Q3 earnings season as has typically been the trend in other recent periods.
The 64.3% revenues beats proportion in Q3 is the lowest that we have seen for this group of 488 index members since the fourth quarter of 2016, with even top-line bellwethers like Nvidia (NVDA - Free Report) , Amazon (AMZN - Free Report) , Alphabet (GOOGL - Free Report) and Facebook coming up short on this count.
Third, some chinks have started showing up in the overall corporate earnings picture, with a number of industry leaders guiding lower due to factors like the impact of the strong U.S. dollar, cost inflation (particularly freight) and trade tariffs. Questions about the international economic growth backdrop represents an additional headwind to corporate earnings.
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.