Big tech certainly defied the impact of the coronavirus pandemic in the June quarter, coming up with blowout results. Apple, Amazon, Alphabet and Facebook generated a combined $28.6 billion in profits for the second quarter, surpassing analysts’ expectations of $19.1 billion.
Earnings beat of such magnitude should certainly help the broader tech sector put up a solid profit performance. Till now, 82.9% of the tech sector’s market capitalization in the S&P 500 index have reported second-quarter results. Total earnings of the companies are down 1.8% despite 2.5% higher revenues, with 90.2% beating EPS estimates and 80.5% trumping revenue estimates (read more: These 3 Charts Clearly Tell the Q2 Earnings Season Story).
Are the broader S&P 500 companies’ results as impressive as the Tech sector’s? Unfortunately, no! Almost 313 S&P 500 members have reported so far, with earnings down 36.2% on 7.8% lower revenues.
However, this week could turn the tide in either direction, with nearly 130 S&P 500 companies set to report, including Dow member The Walt Disney Company DIS that is facing some of the toughest challenges tied to the pandemic. Other notable companies include Roku, Inc. ROKU, Square, Inc. SQ, Uber Technologies, Inc. UBER and Beyond Meat, Inc. BYND. Let us now see how they are poised to fare –
Netflix has already proved that the pandemic has been a boon for its streaming business, but for fellow streaming giant Disney, the story isn’t quite the same. No doubt, Disney+ services are expected to see an uptick in usage in the June quarter. After all, the lockdown measures imposed to curtail the spread of the virus did compel people to stay at home and binge on online videos. But the pandemic surely has impacted Disney’s overall revenue picture due to amusement park closures, film delays, sport cancellations and a weak advertisement business.
Disney’s revenues for the quarter ending June 2020 are expected to come in at $12.65 billion, indicating a year-over-year decline of 37.5%. The bottom line is anticipated at a loss of 43 cents, suggesting a 131.9% decline year over year. The Zacks Rank #5 (Strong Sell) company currently has an Earnings ESP of -26.54%. Per our proven model, the combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the chances of an earnings beat. Disney is slated to report earnings for the June quarter on Aug 4, after the closing bell. You can see the complete list of today’s Zacks #1 Rank stocks here.
Roku is in a far better position compared to Disney as it solely sells streaming services and other technologies that help people watch over-the-top content on TV sets, and it also offers its own free streaming services. Needless to say, the coronavirus pandemic intensified during the April, May and June months, fueling consumers’ appetite for streaming entertainment.
Roku is set to report its June-quarter results on Aug 5, after the market close. The Zacks Rank #3 company currently has an Earnings ESP of +34.74%.
Square, in the meantime, is also poised to report its June-quarter earnings on Aug 5, after market close. Thanks to the social-distancing measures in place, Square saw rising usage of its Cash App that allows users to transfer money to one another using a mobile phone app.
But higher investments and increasing product development expenses might have eaten into Square’s second-quarter profits. Transaction and loan losses due to the pandemic might also have weighed on Jack Dorsey’s financial technology company. The Zacks Rank #4 (Sell) company currently has an Earnings ESP of -19.36%.
Meanwhile, Uber’s numbers aren’t expected to be pretty good given the widespread stay-at-home trend. Obviously, for most part of the June quarter, lockdown measures were imposed which impacted the ridesharing company. And with states scaling back reopening plans, things surely don’t look promising in the near future as well.
Nonetheless, for the June quarter, revenues are expected at $2.17 billion, indicating a year-over-year decline of 31.5%. The bottom line is likely to come in at a loss of 78 cents, suggesting an 83.5% decline year over year. The Zacks Rank #3 company currently has an Earnings ESP of -2.67%. Uber is positioned to report its June-quarter earnings on Aug 6, after the closing bell.
Going back to Aug 4, Beyond Meat is slated to report second-quarter 2020 results, after market close. The leading maker of plant-based meat substitutes’ foodservice distribution channel is expected to have taken a beating amid the pandemic because of temporary restaurant closures. But the health crisis is also likely to have boosted sales in its retail channels as consumers stockpiled food, particularly sources of protein.
To put things into perspective, Beyond Meat’s revenues for the June quarter is expected at $96.95 million, indicating an increase of 44.2% from the year-ago period. However, the Zacks Rank #3 company’s bottom line is projected at a loss of 2 cents, indicating a decrease of 300% year over year.
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The Walt Disney Company (DIS) : Free Stock Analysis Report
Square, Inc. (SQ) : Free Stock Analysis Report
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