U.S. Markets close in 2 hrs 45 mins

JPMorgan, Wells Fargo, Citigroup, Johnson & Johnson, Netflix and Schlumberger are part of Zacks Earnings Preview

Zacks Equity Research

For Immediate Release

Chicago, IL – October 15, 2018 – Zacks.com releases the list of companies likely to issue earnings surprises. This week’s list includes JPMorgan JPM, Wells Fargo WFC, Citigroup C, Johnson & Johnson JNJ, Netflix NFLX and Schlumberger SLB.

To see more earnings analysis, visit https://at.zacks.com/?id=3207.

Every day, Zacks.com makes their Bull Stock of the Day available, free of charge. To see it, click here.

Banks Provide Positive Start to Q3 Earnings Season

Bank stocks have been notable laggards in recent quarters, with market participants preferring the faster growing technology stocks to these seemingly boring companies. But as the turmoil of the last few days’ market action shows, the unwinding of the overcrowded trades in technology and other momentum stocks can get messy very easily.

Banks are boring, but they have a lot going for them. Granted, bank margins have been held down, and low interest rates and loan portfolios haven’t been growing as fast as many of us would like. With respect to loan growth, lending to businesses (broadly referred to as ‘C&I,’ or commercial and industry loans) is healthy enough, with the moderate pace in consumer loans more likely a reflection of stricter and more prudent standards at the banks. And margins should start moving higher with the recent uptrend in interest rates. Bank management teams have become very good at cost controls, and they pay out stable and growing dividends.

Banks earnings aren’t great, but they are good enough and reasonably stable, unless you see the U.S. economy heading toward a recession. We see all of this in the results from JPMorgan, Wells Fargo and Citigroup, which kicked-off the Q3 earnings season for the Finance sector on Friday. Q3 earnings for these three major banks are +16.1% from the same period last year on +3.4% higher revenues. All in all, the trading and mortgage banking revenues were weak and investment banking was flat, with most of the growth coming from consumer banking and effective cost controls.

Finance Sector Scorecard (as of Friday, October 12th)

We now have Q3 results from 4 of the 97 Finance sector companies in the S&P 500 index. Keep in mind, however, that these 4 companies account for 21.5% of the sector’s total market capitalization in the index.

Total earnings for these 4 Finance companies are up +16.1% from the same period last year on +3.4% higher revenue growth, with 75% beating EPS and revenue estimates.

The sector’s earnings growth picture is tracking above historical periods, while revenue growth is modest and in-line with recent trends.

For the quarter as a whole, total Finance sector earnings are expected to be up +31.6% from the same period last year on +3.1% higher revenues. This would follow +21.5% earnings growth in 2018 Q2 on +7.6% higher revenues. Please note that the sector’s strong growth this year is for the most part to thanks to the corporate tax cuts early this year.

Overall Expectations for 2018 Q3

Total Q3 earnings are expected to be up +18.7% from the same period last year on +7.8% higher revenues, with double-digit earnings growth for 10 of the 16 Zacks sectors. The growth pace has started going up as companies come up with better-than-expected results, as we saw with the banks on Friday.

Including the banks, we now have Q4 results from 24 S&P 500 members, with total earnings for these 24 index members up +21.2% from the same period last year on +9.5% higher revenues. This is still a small and relatively unrepresentative sample. But the one thing that stands out at this stage is the low proportion of companies beating revenue estimates relative to other recent periods.

This Week’s Major Reports

We have a busy reporting docket in the coming week, with almost 150 companies coming out with quarterly results, including 52 S&P 500 members.

This week’s reporting docket is concentrated in the Finance sector, with the remaining major banks and regional operators, brokers and insurers reporting results. Other notable concentrated areas include the airlines and railroad operators and a number of big name companies. By the end of this week, we will have seen Q3 results from only about 15% of the index’s membership, but that sample of results will represent a fairly representative cross-section of most of the major sectors.

Here are the major reports on the docket this week from outside of the Finance sector:

Johnson & Johnson- JNJ reports quarterly results before the market open on Tuesday, October 16th, with the company expected to earn $2.03 per share on $19.9 billion in revenues, representing year-over-year gains of +6.8% and +1.3%, respectively. The stock has been weak lately, down -5.4% in the year-to-date period, underperforming the Zacks Medical sector’s +0.2% gain and the S&P 500 index’s +2.1% gain in the same time period. The stock was up on the last earnings release on July 17th, which followed two back-to-back quarters of negative reactions to earnings releases.

Netflix– Netflix is expected to report results after the market’s close on Tuesday, October 16th, with the company expected to earn $0.68 per share on $3.99 billion in revenues. Earnings per share for the quarter will be +134.5% higher from the year-earlier period while revenues would be up +33.7% from the same period last year.

The stock always responds in a major way to the earnings report, but the big data points for the market aren’t EPS and revenues, but rather subscriber growth. The stock was down following the June-quarter release when international subscriber growth missed expectations and has yet to get back to the pre-Q2 release date of July 16th, even prior to the recent sell-off. The expectation for this quarter is that the company added 4.4 million international streaming subscribers.  

Schlumberger– Schlumberger reports before the market’s open on Friday, October 19th, with the oilfield services giant expected to post $0.46 in EPS on $8.59 billion in revenues, up +9.5% and +8.7% from the year-earlier level, respectively. The revisions trend has been negative since the quarter got underway, with analysts lowering their estimates on weakness in North American activity levels, particularly on the pressure-pumping side.

The stock has lagged the broader energy space, with Schlumberger shares down -12.9% in the year-to-date period vs. a +0.9% gain for the Zacks Energy sector.

For more details about the overall earnings picture and the Q3 earnings season, please check our weekly Earnings Trends report.

Zacks "Profit from the Pros" e-mail newsletter offers continuous coverage of the industries and the stocks poised to outperform the market. Click to subscribe to this free newsletter today.

About Zacks

Zacks.com is a property of Zacks Investment Research, Inc., which was formed in 1978. The later formation of the Zacks Rank, a proprietary stock picking system; continues to outperform the market by nearly a 3 to 1 margin. The best way to unlock the profitable stock recommendations and market insights of Zacks Investment Research is through our free daily email newsletter; Profit from the Pros.  In short, it's your steady flow of Profitable ideas GUARANTEED to be worth your time! Register for your free subscription to Profit from the Pros.

Follow us on Twitter:  https://twitter.com/zacksresearch

Join us on Facebook:  https://www.facebook.com/home.php#/pages/Zacks-Investment-Research/57553657748?ref=ts

Zacks Investment Research is under common control with affiliated entities (including a broker-dealer and an investment adviser), which may engage in transactions involving the foregoing securities for the clients of such affiliates.

Media Contact

Zacks Investment Research

800-767-3771 ext. 9339

support@zacks.com

https://www.zacks.com

Zacks.com provides investment resources and informs you of these resources, which you may choose to use in making your own investment decisions. Zacks is providing information on this resource to you subject to the Zacks "Terms and Conditions of Service" disclaimer. www.zacks.com/disclaimer.

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


Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
 
JPMorgan Chase & Co. (JPM) : Free Stock Analysis Report
 
Wells Fargo & Company (WFC) : Free Stock Analysis Report
 
Citigroup Inc. (C) : Free Stock Analysis Report
 
Netflix, Inc. (NFLX) : Free Stock Analysis Report
 
Johnson & Johnson (JNJ) : Free Stock Analysis Report
 
Schlumberger Limited (SLB) : Free Stock Analysis Report
 
To read this article on Zacks.com click here.

  • GE can improve valuation by 2020, UBS says: 'It won't be quick, and it is likely to be volatile'
    Business
    CNBC

    GE can improve valuation by 2020, UBS says: 'It won't be quick, and it is likely to be volatile'

    General Electric will be able to reduce its debt "to far more acceptable levels by 2020," UBS said Monday. "We maintain our conviction that the stock presents a long-term capital appreciation opportunity," UBS analyst Steven Winoker said in a note. UBS said General Electric GE will be able to reduce its debt "to far more acceptable levels by 2020," despite fears the industrial conglomerate's bonds could soon become junk-rated.

  • Business
    CNBC

    This is what Google learned after interviewing one job candidate 16 times, according to Eric Schmidt

    Eric Schmidt joined Google as CEO in 2001 and led the tech company for the next decade as the company grew from a start-up to a corporate behemoth, whose parent company, Alphabet, now has a market cap of over $740 billion . "They were super smart, somewhat disorganized kinds of people," Schmidt told Tyler Cowen on the " Conversations with Tyler " podcast. "The recruiting started off as informal, but it ultimately became very, very structured," Schmidt said.

  • Hedge-fund boss who predicted ‘87 crash says get ready for some ‘really scary moments’
    News
    MarketWatch

    Hedge-fund boss who predicted ‘87 crash says get ready for some ‘really scary moments’

    ‘From a markets perspective, it’s going to be interesting. Paul Tudor Jones, a hedge-fund luminary, said he’s stress-testing his portfolio of corporate debt because he expects a tumultuous road ahead on the back of the Federal Reserve’s apparent commitment to normalizing interest rates and buttressed by corporate tax cuts from the Trump administration. Speaking at an economic forum in Greenwich, Conn., a hotbed for hedge funds, Jones said the Fed faces real challenges amid “the end of a 10-year run” of economic growth that many anticipate will soon come to a screeching, cyclical end.

  • Amazon and other big tech stocks are being crushed: Here's the simple explanation
    Finance
    Yahoo Finance

    Amazon and other big tech stocks are being crushed: Here's the simple explanation

    Reality continues to rain down on formerly high-flying big tech stocks. Sales growth in 2019 will probably be less explosive than 2018. Blame slowing user growth at the likes of Facebook or more competition for Amazon from the increasingly digitally savvy Target – the fact is the sales growth environment for big tech is taking a turn for the worse.

  • Trump Insults Key House Democrat Adam Schiff With Potty Humor Tweet
    Politics
    Fortune

    Trump Insults Key House Democrat Adam Schiff With Potty Humor Tweet

    President Donald Trump insulted Democratic Representative Adam Schiff of California with a tweet that misspelled the Intelligence Committee member’s name in a way that suggests a scatological reference. “So funny to see little Adam Schitt (D-CA) talking about the fact that Acting Attorney General Matt Whitaker was not approved by the Senate, but not mentioning the fact that Bob Mueller (who is highly conflicted) was not approved by the Senate!” Trump tweeted on Sunday. Schiff, a frequent critic of Trump, said on ABC’s “This Week” earlier in the day that the appointment of Whitaker was “unconstitutional” because he wasn’t confirmed by the Senate — a claim that other Democratic lawmakers have made and the White House rejects.

  • Condoleezza Rice As Cleveland Browns' Head Coach Would Give the NFL Its Own 'Glass Cliff' Moment
    News
    Fortune

    Condoleezza Rice As Cleveland Browns' Head Coach Would Give the NFL Its Own 'Glass Cliff' Moment

    The buzziest news of this weekend is no doubt the ESPN report that the Cleveland Browns are considering former U.S. Secretary of State Condoleezza Rice to be the NFL team’s next head coach. The Browns have denied the report, but if true, she’d be the first woman to interview for an NFL head coach job. Rice, who served in the George W. Bush administration, is known to be a passionate sports fan and is a lifelong Browns supporter, having inherited an allegiance to the notoriously woeful team from her father.

  • Why Target (TGT) Might Surprise This Earnings Season
    Finance
    Zacks

    Why Target (TGT) Might Surprise This Earnings Season

    Investors are always looking for stocks that are poised to beat at earnings season and Target Corporation TGT may be one such company. The firm has earnings coming up pretty soon, and events are shaping up quite nicely for their report.That is because

  • 3 Things Chesapeake Energy Corporation's CEO Wants You to Know About Its Surprising Addition
    Business
    Motley Fool

    3 Things Chesapeake Energy Corporation's CEO Wants You to Know About Its Surprising Addition

    Chesapeake Energy (NYSE: CHK) recently stunned investors by agreeing to acquire WildHorse Resource Development (NYSE: WRD) for nearly $4 billion in cash and stock. Lawler stated on the call that "the WildHorse acquisition strengthens and accelerates the delivery of our near-term strategic priorities of margin improvement, sustainable free cash flow, and a net debt-to-EBITDA ratio" of 2. First, the CEO noted that because higher-margin oil makes up the bulk of WildHorse's current production, the combined company's margins on a per-barrel of oil equivalent (BOE) basis will expand by 35% in the next year and more than 50% by 2020.

  • News
    MarketWatch

    Dow tumbles 425 points to start Thanksgiving week; Boeing, Apple deliver biggest intraday blows

    MARKET PULSE The Dow Jones Industrial Average (DJIA) was sinking midday Monday, pressured by a decline in Boeing Co.'s stock (BA) and Apple Inc. to start the holiday-shortened week. Boeing shares were exacting a roughly 100-point toll

  • Stocks slide as tech worries grow
    JD
    Yahoo Finance Video

    Stocks slide as tech worries grow

    Stocks are starting the day lower as tech worries grow. Yahoo Finance’s Seana Smith has more from the New York Stock Exchange.

  • The 1 High-Risk Marijuana Stock I Just Bought
    Business
    Motley Fool

    The 1 High-Risk Marijuana Stock I Just Bought

    Marijuana sales eclipse $150 billion annually, and while most of those sales happen in the shadows of the black market, momentum to legalize marijuana is growing worldwide. In the U.S., 66% of Americans favor legalizing cannabis, according to a recent Gallup study, and in November, Michigan became the 10th state to approve recreational marijuana while Missouri and Utah became the 32nd and 33rd states to approve medical marijuana laws. North of the border, Canada's national medical marijuana market is already producing about $600 million annually in revenue, and after electing the liberal party to office in its last election, the country opened its recreational adult-use marijuana market to fanfare in October. Headway is also being made to clear obstacles to marijuana use in other large countries, including Germany and Australia.

  • Facebook faces growth trouble
    Business
    CNBC Videos

    Facebook faces growth trouble

    CNBC’s Julia Boorstin reports on the trouble at Facebook and new reports about CEO Mark Zuckerberg’s management style.

  • Lockheed Martin Lands 255-Jet Fighter Order Worth $22.7 Billion
    Business
    Motley Fool

    Lockheed Martin Lands 255-Jet Fighter Order Worth $22.7 Billion

    Let the shareholders rejoice: Lockheed Martin's (NYSE: LMT) F-35 Lightning II fighter jet contracts are getting bigger -- and bigger. In September, Reuters  reported on a Pentagon deal to buy what it called at the time "the biggest batch yet" of Lockheed Martin's joint strike fighter -- 141 fighter jets valued at $11.5 billion. To win such a big order, Lockheed lowered its average F-35 cost to $81.6 million.

  • Should Value Investors Consider AbbVie (ABBV) Stock Now?
    Finance
    Zacks

    Should Value Investors Consider AbbVie (ABBV) Stock Now?

    Value investing is easily one of the most popular ways to find great stocks in any market environment. One way to find these companies is by looking at several key metrics and financial ratios, many of which are crucial in the value stock selection process. A key metric that value investors always look at is the Price to Earnings Ratio, or PE for short.

  • Plug Power files to sell 21.2 million shares
    Finance
    American City Business Journals

    Plug Power files to sell 21.2 million shares

    Plug Power, the Latham, New York fuel cell manufacturer, plans to sell up to 21.2 million shares of common stock owned by two major shareholders. The selling stockholders are Tech Opportunities LLC, which holds 12.93 million shares for about 5.5 percent of the company, and CVI Investments, which has 7.6 million shares for 3 percent of the company. If all 21.2 million shares are sold, CVI would hold no stock and Tech Opportunities would hold about 2.1 percent.

  • Business
    Motley Fool

    Why Procter & Gamble Is Now All the Rage on Wall Street

    On the Motley Fool Industry Focus podcast, we're taking a break from manic market action to highlight stocks which investors can buy to play defense -- without having to check a quote screen every five minutes. In particular, we hone in on consumer staples stocks, which have led the entire market over the last three extremely volatile months. To understand why sleepy consumer conglomerate Procter & Gamble (NYSE: PG) has found new fans and is a worthy choice to shore up a tech or healthcare-heavy portfolio, simply watch the video below.

  • Top Stocks Warren Buffett Just Sold
    Business
    Motley Fool

    Top Stocks Warren Buffett Just Sold

    Warren Buffett's Berkshire Hathaway (NYSE: BRK-A) (NYSE: BRK-B) has been busy. In addition to swooping in and buying bundles of bank stocks, Buffett sold some of Berkshire's longtime holdings in the third quarter. Since Berkshire Hathaway manages a portfolio worth more than $200 billion, and it tends to be among the biggest owners of the stocks it purchases, knowing what stocks it's selling is important.

  • Why Snap Is Down 55% in 2018 Year to Date
    Business
    Motley Fool

    Why Snap Is Down 55% in 2018 Year to Date

    Shares of Snap (NYSE: SNAP), the parent company of Snapchat, started off the year on a high note as they climbed a staggering 28% in February. The nearly yearlong decline in share prices has left Snap's stock down 55%, and the company's failure to significantly grow its customer base means that there's little hope that prices will rebound anytime soon. Snap's gains early in the year came after the company released its fourth-quarter results on Feb. 7.

  • Business
    Bloomberg

    Micron Falls After FT Report Indicates Deepening China Probe

    (Bloomberg) -- Shares of Micron Technology are down 2 percent pre-market, after the Financial Times reported that Chinese authorities would deepen an antitrust probe into Micron and two other chipmakers, claiming ”massive evidence” of violations.Western

  • Why Verizon Is Up 12% So Far in 2018
    Business
    Motley Fool

    Why Verizon Is Up 12% So Far in 2018

    Shares of Verizon (NYSE: VZ) are up 12% so far this year, handily beating the S&P 500's paltry 2% gain as the end of 2018 nears. The main reason for Verizon's 2018 advance has to do with modest gains in its subscriber base. In the third quarter of 2018, Verizon reported 515,000 net additions to its postpaid wireless-subscriber base.

  • Apple cuts production orders for all three new iPhone models - WSJ
    Business
    Reuters

    Apple cuts production orders for all three new iPhone models - WSJ

    (Reuters) - Apple Inc (AAPL.O) has cut production orders in recent weeks for all three iPhone models launched in September, the Wall Street Journal reported on Monday, citing sources. A lower-than-expected demand for the new iPhones and

  • 3 Payment Stocks Set to Gain From Holiday Season Sales
    Finance
    Zacks

    3 Payment Stocks Set to Gain From Holiday Season Sales

    Payments’ companies should see an increase in card processing via their payments' network in the upcoming holiday season, which is expected to see smashing sales. According to Discover’s annual holiday shopping survey, 25% of consumers plan to spend more this holiday season than they did last year. All these imply increased use of payment networks and cards, which generate revenues and fee income for the players involved.

  • Warren Buffett Is Betting $86 Billion on This Industry
    Business
    Motley Fool

    Warren Buffett Is Betting $86 Billion on This Industry

    Berkshire Hathaway (NYSE: BRK-A) (NYSE: BRK-B) recently revealed the contents of its closely watched stock portfolio as of the third quarter, and to the surprise of many investors, the company spent an 11-figure sum on bank stocks. In all, Berkshire Hathaway's bank stocks, much of which were selected by CEO Warren Buffett himself, are worth more than $86 billion as of this writing.

  • Best Amazon Black Friday and Cyber Monday deals so far
    News
    The Telegraph

    Best Amazon Black Friday and Cyber Monday deals so far

    As supreme ruler of the online retail landscape, Amazon has built quite the reputation for extraordinary Black Friday deals. Last year alone the selection was so generous and diverse that the website went on to handle 54.9% of all online Black Friday transactions, according to Hitwise data cited in Dealerscope. The weekend was so successful for the company, in fact, that Cyber Monday went on to become the biggest shopping day in the company’s history.

  • Why Is Schlumberger (SLB) Down 17.5% Since Last Earnings Report?
    Finance
    Zacks

    Why Is Schlumberger (SLB) Down 17.5% Since Last Earnings Report?

    It has been about a month since the last earnings report for Schlumberger (SLB). Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important catalysts. Schlumberger’s third-quarter 2018 earnings of 46 cents per share (excluding charges and credits) trumped the Zacks Consensus Estimate of 45 cents and also improved from the year-ago quarter’s adjusted figure of 42 cents.