Nike, CarMax, Accenture, ConAgra and Carnival are part of Zacks Earnings Preview
For Immediate Release
Chicago, IL – September 24, 2018 – Zacks.com releases the list of companies likely to issue earnings surprises. This week’s list includes Nike NKE, CarMax KMX, Accenture ACN, ConAgra CAG and Carnival Corporation CCL.
Q3 Earnings Season Preview
We have to wait another few weeks before Q3 earnings season really takes the spotlight, but the reporting cycle has gotten underway already, with results from 8 S&P 500 members out and another 8 index members on deck to report this week. All of these early reporters have fiscal quarters ending in August, but they get counted as part of the September-quarter tally.
All in all, we will have seen Q3 results from almost two dozen S&P 500 members by the time JPMorgan (unofficially) kicks-off this earnings season on Friday, October 12th.
The notable earnings reports coming out this week include:
Nike reports after the markets close on Tuesday, September 25th, with the company expected to earn 62 cents in EPS on $9.88 billion in revenues, up +8.8% and +8.9% from the year-earlier period, respectively. The stock was up big following the last earnings release on June 28th, which followed three back-to-back quarters of varying degrees of negative reactions to quarterly reports. Estimates have remained stable ahead of this release, but the stock has been a standout performer lately, up +37% this year vs. +4.9% gain for the Zacks Consumer Discretionary sector and +9.7% gain for the S&P 500 index. Given the stock’s recent outperformance, it is likely that market participants will something in the report that isn’t to their liking.
CarMax reports before the market’s open on Wednesday, September 26th, with the company expected to earn $1.22 per share on $4.7 billion in revenues, up +24.5% and +7.2% from the year-earlier period. While the company had to temporarily close down about 7% of its stores located in the Carolinas for Hurricane Florence, the disruption last year was a lot worse given heavy presence in Florida and Georgia. The stock is up +22.6% in the year-to-date period, modestly lagging its industry, but doing better than the broader market.
Accenture reports before the market’s open on Thursday, September 27th, with the consulting firm expected to earn $1.55 per share on $9.98 billion in revenues, up +4.7% and +9.1% from the year-earlier period, respectively. Estimates have modestly come down in recent days, likely due to FX reasons. But the stock has been a strong performer, up +14% in the year-to-date period. Management’s commentary about the state of the business will likely have read-through for other operators like IBM and Hewlett-Packard Enterprise.
ConAgra and Carnival Corporation are a couple of the other major companies reporting results this week.
Expectations for Q3
Total Q3 earnings are expected to be up +17.7% from the same period last year on +7.2% higher revenues. This would follow +25.4% earnings growth in 2018 Q2 on +9.8% revenue growth, the highest growth pace since 2010.
Estimates for Q3 came down as the quarter unfolded, with the current +17.7% growth down from +19.6% at the end of June. Please note that the negative revisions trend for Q3 is in contrast to the three preceding quarters when the revisions trend was a lot more favorable. A big part of the positive revisions over the last two quarters was due to the direct impact of the tax cuts. With that issue now behind us, the revisions trend appears to be moving back to how it has behaved over the last few years. That said, the magnitude of negative revisions to Q3 estimates is lower than the historical norm of the last few years.
Q3 earnings growth expectations contrasted with what is expected in the following two quarters and actual results in the preceding 5 quarters. This growth trend is expected to continue in the second half of the year but the pace is expected to decelerate.
Early Q3 Results
As mentioned earlier, we have Q3 results from 8 S&P 500 members already. It is hard to draw any firm conclusions from the results thus far, but total earnings for these 8 index members are up +38.7% from the same period last year on +12% higher revenues, with 87.5% beating EPS estimates and 50% beating revenue estimates.
This is not a representative sample of results, but the earnings growth pace is tracking below what we had seen from the same group of companies in the preceding quarter.
Note: Sheraz Mian manages the Zacks equity research department. He is an acknowledged earnings expert whose commentaries and analyses appear on Zacks.com and in the print and electronic media. His weekly earnings related articles include Earnings Trends and Earnings Preview.
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CarMax, Inc. (KMX) : Free Stock Analysis Report
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Accenture PLC (ACN) : Free Stock Analysis Report
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