For Immediate Release
Chicago, IL – September 16, 2019 – Zacks.com releases the list of companies likely to issue earnings surprises. This week’s list includes FedEx FDX, Adobe Systems ADBE, General Mills GIS, Darden Restaurants DRI and Apple AAPL.
Looking Ahead to Q3 Earnings Season
It is too early for many to start talking about the 2019 Q3 earnings season, as we are almost a month away from the big banks (unofficially) kicking-off the latest reporting cycle. It is only in the run up to these bank releases that everyone starts paying attention to the start of another earnings season. Unfortunately for us, we don’t have the luxury to wait that long as we are responsible for maintaining the ‘books’ on every earnings season.
From our standpoint, the 2019 Q3 earnings season got underway when Oracle released its August-quarter results a day ahead of schedule on September 11th. We have an additional four S&P 500 members on deck to report results this week. These include FedEx and Adobe Systems on Tuesday, General Mills on Wednesday and Darden Restaurants on Thursday.
All of these companies have fiscal quarters ending in August, which we count as part of our September-quarter tally. The fact is that by the time JPMorgan reports September-quarter results on October 15th, we will have seen such Q3 results from almost two dozen S&P 500 members already.
Expectations for 2019 Q3 & Beyond
Tough comparisons to last year when growth was boosted by the tax cut legislation were all along expected to weigh on earnings growth in 2019. Moderating U.S. economic growth and notable slowdowns in other major global economic regions are having a further negative impact. Uncertainty about the global trade regime and a growing resort to tariffs are not helping matters either.
As a result, earnings were essentially flat in the first half of 2019 and no significant improvement is expected in the growth trajectory in the September quarter either. While Q3 earnings growth is expected to be negative, current estimates indicate a modestly positive growth rate in the December quarter. History tells us that even that modestly positive growth rate in Q4 will likely turn negative in the coming days as estimates for that period come down as companies report Q3 results.
For the September quarter, the expectation is that earnings for the S&P 500 index will decline by -4.8% from the same period last year on +4.2% higher revenues, with 12 of the 16 Zacks sectors expected to have lower earnings compared to the year-earlier period, including the Tech sector.
The overall tone and substance of management guidance during the last earnings season was on the negative side. This reflected a combination of slowing economic growth, particularly beyond the U.S., and rising input expenses. As a result, analysts steadily lowered their estimates for 2019 Q3.
The Tech Sector Drag
Earnings growth is expected to be in negative territory for 12 of the 16 Zacks sectors, with Energy, Basic Materials, and Technology expected to experience double-digit declines. The Finance sector is able to eke out a modestly positive growth rate in Q3.
It is the weak Tech growth that is dragging the aggregate Q3 earnings growth rate for the S&P 500 index into negative territory. The Tech sector is the biggest earnings contributor in the S&P 500 index, bringing in 22.9% of the index’s total earnings in forward 4-quarter period. Excluding the Tech sector’s drag, total earnings growth for the remainder of the index would be down only -2.8% (-4.8% with Tech included).
Driving the Tech sector’s weak earnings growth expectation for the quarter is Apple and the broader semiconductor space. For Apple, September quarter earnings are expected to be down -9.4% on -1.1% lower revenues.
For an in-depth look at the overall earnings picture and expectations for Q3, please check out our weekly Earnings Trends report >>>> Q3 Earnings Season Preview
Breakout Biotech Stocks with Triple-Digit Profit Potential
The biotech sector is projected to surge beyond $775 billion by 2024 as scientists develop treatments for thousands of diseases. They’re also finding ways to edit the human genome to literally erase our vulnerability to these diseases.
Zacks has just released Century of Biology: 7 Biotech Stocks to Buy Right Now to help investors profit from 7 stocks poised for outperformance. Our recent biotech recommendations have produced gains of +98%, +119% and +164% in as little as 1 month. The stocks in this report could perform even better.
See these 7 breakthrough stocks now>>
Join us on Facebook: https://www.facebook.com/home.php#/pages/Zacks-Investment-Research/57553657748?ref=ts
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 Investment Research
800-767-3771 ext. 9339
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.
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
Apple Inc. (AAPL) : Free Stock Analysis Report
Adobe Systems Incorporated (ADBE) : Free Stock Analysis Report
General Mills, Inc. (GIS) : Free Stock Analysis Report
Darden Restaurants, Inc. (DRI) : Free Stock Analysis Report
FedEx Corporation (FDX) : Free Stock Analysis Report
To read this article on Zacks.com click here.
Zacks Investment Research