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JPMorgan, Netflix, IBM, Micron and Wells Fargo are part of Zacks Earnings Preview

Zacks Equity Research

For Immediate Release

Chicago, IL – October 14, 2019 – Zacks.com releases the list of companies likely to issue earnings surprises. This week’s list includes JPMorgan JPM, Netflix NFLX, IBM IBM, Micron MU and Wells Fargo WFC.

What to Expect from Big Banks in Q3 Earnings Season?

The Finance sector dominates this week’s line up of earnings reports, with a representative cross section of the space’s representatives on deck to come out with September-quarter results. These include the big money-center operators like JPMorgan.

This week’s line up of reports has enough representation from other major sectors to give us a good flavor of what to expect the rest of this reporting cycle. Outside of the Finance sector, we will get to see results from Netflix, IBM and the major railroad operators. In total, we have more than 100 companies reporting quarterly results this week, including 52 S&P 500 members.

Regular readers know that we count results from the 23 S&P 500 members that have already reported their fiscal quarters ending in August as part of the Q3 tally. This means that we will have seen Q3 results from about 15% of the index’s total membership by the end of this week. And as you can see in the chart below of weekly reporting calendar, the Q3 earnings season is fairly front-end loaded, particularly for the S&P 500 index.

Early Q3 Results

Total earnings for the aforementioned 23 S&P 500 members that have already reported their fiscal quarters ending in August and get counted as part of the Q3 tally are down -12.7% from the same period last year on +3.5% higher revenues, with 87% beating EPS estimates and 60.9% beating revenue estimates.

It is hard to draw any useful conclusions from the results thus far, with the pronounced earnings decline primarily a function of tough comparisons at Micron whose Q3 earnings were down -86.7% on -42.3% lower revenues. That said, the proportion of companies beating revenue estimates are relatively on the lower side.

Expectations for 2019 Q3 & Beyond

For Q3 as a whole, total earnings for the index are expected to decline -5% from the same period last year on +4.2% higher revenues, with 11 of the 16 Zacks sectors expected to have lower earnings compared to the year-earlier period, including the Tech sector.

We will know what the final Q3 earnings growth pace turns out to be when all the results are in, but we know that they will be better than these expectations, likely close to the flat line that we saw in the first half of the year.

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.

What Are Banks Expected to Earn?

Total Q3 earnings for the Zacks Major Banks industry that includes JPMorgan, Wells Fargo and other major industry players are expected to be down -9.4% from the same period last year on +0.3% higher revenues.

The table below shows the Finance sector’s Q3 earnings and revenue growth expectations at the medium-industry level relative to the space’s actual results in the preceding period and expectations for next quarter.

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