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Cisco Systems, Applied Materials and Tapestry are part of Zacks Earnings Preview

Zacks Equity Research

For Immediate Release

Chicago, IL – August 10, 2020 – Zacks.com releases the list of companies likely to issue earnings surprises. This week’s list includes Cisco Systems, Inc. CSCO, Applied Materials, Inc. AMAT and Tapestry, Inc. TPR.

Making Sense of the Earnings Picture

The Covid-19 pandemic dealt a severe blow to the U.S. economy and corporate profitability. The full extent of the pandemic’s earnings impact is becoming clearer as we enter the final stages of the Q2 earnings season. As would be expected during a downturn, earnings and revenue growth has suffered. But there are clear signs of improvement on the horizon as well, which should reassure market participants that had piled into stocks following the March 23rd lows, partly on expectations of such an improvement.

In the spirit of a picture-being-worth-a-thousand-words, we are using the charts below to tell a story that emerges from the Q2 earnings season.

Please note that through Friday, August 7th, we have seen Q2 results from 445 S&P 500 members or 89% of the index’s total membership. We have another 12 index members on deck to report results this week, including Cisco, Applied Materials, Tapestry and others. 

As we all know, most companies withdrew previously issued guidance given how difficult it was project business trends during the period because of the pandemic.

An above average 56.4% of the S&P 500 members are beating both EPS and revenue estimates.

We knew that the pandemic dealt a severe blow to corporate profitability and the results of the 445 S&P 500 companies gives us a good idea of the magnitude of that growth hit.

Total earnings (or aggregate net income) for the 445 S&P 500 members are down -34.8% on -10.9% lower revenues. To round out this scorecard, 80.2% of these 445 index members have beaten consensus EPS estimates and the corresponding revenue beats percentage is 63.1%, with a blended beats percentage of 56.4%.

Q3 earnings for the S&P 500 index are currently expected to decline -23.9% from the same period last year. But the growth picture has been steadily improving since the start of July. We see a similar trend in place for 2020 Q4 and full-year 2020 estimates as well.

This is a notable improvement in the overall earnings picture since the start of the pandemic.

As would be expected, 2020 estimates came down as the pandemic unfolded, with the current -21.5% decline down from +7.9% growth at the start of the year. But as mentioned earlier in the context of 2020 Q3 estimates, the revisions trend lately has been positive.

For an in-depth look at the overall earnings picture and expectations for the coming quarters, please check out our weekly Earnings Trends report >>>> Earnings Estimates Are Going Up

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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/performancefor information about the performance numbers displayed in this press release.


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