Apple, Spotify, General Electric And Exxon Are Part Of Zacks Earnings Preview

For Immediate Release

Chicago, IL – July 29, 2019 – Zacks.com releases the list of companies likely to issue earnings surprises. This week’s list includes Apple (NASDAQ:AAPL) , Spotify (NYSE:SPOT) , General Electric (NYSE:GE) and Exxon (NYSE:XOM) .

A Reassuring Earnings Picture

The Technology sector has helped stabilize the aggregate earnings growth picture, with Q2 no longer expected to be in negative territory. The picture beyond the Technology space has been decent enough as well, notwithstanding the tariffs overhang on a number of trade-exposed industries.

With results from 44% of S&P 500 members already out, we haven’t seen any major negative surprises. We expect this reassuring and generally favorable trend to continue this week as we enter the second half of the Q2 reporting cycle.

This week is the busiest of the Q2 earnings season, with almost 1,000 companies reporting results, including 163 S&P 500 members. This week’s reporting docket is comprised of a representative cross section of the index, ranging from Apple and Spotify to General Electric and Exxon. By the end of this week, we will have seen Q2 results from 75% of S&P 500 members.

Here are the key takeaways from the Q2 earnings season after seeing results from 220 S&P 500 members through Friday, July 26^th:

First, no major surprises on the growth front, which we knew will be anemic. We should keep in mind however that the growth challenge is more a function of tough comparisons to last year’s record results than a cyclical downturn in profitability.

Total earnings for the 220 index members that have reported are up +4.7% from the same period last year on +5.2% higher revenues. Earnings and revenue growth for the same cohort of companies had been +3% and +5.3% in the preceding earnings season, respectively. In other words, earnings growth is tracking modestly above what we had seen in the March quarter and revenue growth is almost even.

Earnings growth for the quarter was expected to be in negative territory before this earnings season got underway. But the blended growth rate, which combines the actual results that have come out with estimates for the still-to-come companies is for flat growth (0% growth) on +4.1% revenue growth. This could change as we go through the remainder of this earnings season. But at least at this stage, Q2 growth is no longer negative.

Second, positive EPS surprises are about in-line with historical trends while the proportion of these companies beating revenue estimates is notably on the weaker side.

For the 220 index members that have reported results already, 78.2% are beating EPS estimates and 57.3% are beating revenue estimates. For the same cohort of companies, the proportion of positive EPS and revenue surprises was 78.2% and 57.3% in the Q1 earnings season.

Third, estimates for 2019 Q3 are coming down more than what we saw in the comparable period for the preceding two quarters, but about in-line with historical trends.

Estimates for full-year 2019 are coming down as well, though the magnitude of negative revisions is a lot lower currently than had been the case at the start of the year.

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