For Immediate Release
Chicago, IL – March 19, 2018 – Zacks.com releases the list of companies likely to issue earnings surprises. This week’s list includes FedEx FDX, Oracle ORCL and Nike NKE.
To see more earnings analysis, visit https://at.zacks.com/?id=3207.
Q1 Earnings Season to Show Growth Acceleration
It is too early to start talking about the 2018 Q1 earnings season, as we are almost a month away from the big banks kicking-off the latest reporting cycle. That’s when everyone in the market will start paying attention to the Q1 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.
While we haven’t (officially) closed the books on the 2017 Q4 earnings season yet (we have results from 499 S&P 500 members at this stage), the 2018 Q1 earnings season has actually gotten underway already.
The bulk of 2018 Q1 results will be comprised of companies coming out with fiscal March-quarter results. But as we all know, fiscal and calendar quarters don’t match for all companies, as is the case with Adobe, AutoZone and Costco whose fiscal quarters ended in February. We club such fiscal February-quarter results as part of our March-quarter tally.
It is in this context that the 2018 Q1 earnings season has gotten underway for us already. We have another 10 S&P 500 members with fiscal quarters ending in February on deck to report such 2018 Q1 results this week, which includes a number of industry leaders like FedEx, Oracle, Nike and others.
The fact is that by the time the big banks come around to report March-quarter results (Alcoa thankfully no longer has this honor), we will have seen Q1 results from almost two dozen S&P 500 members.
Expectations for 2018 Q1
The strong momentum we saw in the preceding earnings season is expected to continue this reporting cycle as well, with total earnings for the S&P 500 index expected to be up +15.5% from the same period last year on +7.2% higher revenues. This would follow the +13.5% earnings growth on +8.5% revenue growth in the 2017 Q4 earnings season, the best quarterly performance in more than 6 years.
There were two aspects of the preceding earning season that really stood out and put that reporting cycle in a category of its own. It will be interesting to see to what extent we see a repeat performance on those two counts in the 2018 Q1 earnings season.
These two standout features of the 2017 Q4 earnings season were the very strong momentum on the revenue front and impressive turnaround on the estimate revisions front.
The revenue momentum likely reflected a combination of the synchronized global growth environment and a favorable foreign exchange backdrop. With both of those factors still very much in play in Q1 as well, we can reasonably expect to see the revenue momentum trend continue this earnings season as well.
Earnings growth expectations for 2018 Q1 moved up significantly since mid-December 2017. This represented a major trend shift relative to what we have been seeing over the last many years when estimates would actually be moving in the opposite direction. To be fair, the revisions trend had stabilized in the preceding quarters as well, with estimates for 2017 Q4 essentially remaining unchanged in the three months ahead of the start of that reporting cycle.
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