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Oracle, Costco, FedEx, NIKE and JPMorgan are part of Zacks Earnings Preview

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Zacks Equity Research
·6 min read
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For Immediate Release

Chicago, IL – March 15, 2021 – Zacks.com releases the list of companies likely to issue earnings surprises. This week’s list includes Oracle Corporation ORCL, Costco Wholesale Corporation COST, FedEx Corporation FDX, NIKE, Inc. NKE and JPMorgan Chase & Co. JPM.

Previewing Q1 2021 Earnings Season

It's been a year now since the Covid-19 pandemic took over our lives. Thankfully for all of us, there is a lot more clarity ahead, with the vaccination efforts enabling us to put the worst of the pandemic behind us in the coming months. This optimism about the days ahead is showing up in a brighter economic outlook, with estimates of GDP growth reaching levels not seen in a very long time.

All of this has a direct bearing on the two factors that drive stock prices in the long run – corporate earnings and interest rates. Our focus in this note is on the evolving earnings picture as we look ahead to the March-quarter earnings season that will take the spotlight in the coming days, but a brief comment on the interest rate picture is in order here.

Parts of the market appear to be really worried about the recent jump in treasury yields, prompting a pullback in high-growth stocks and rotations into more cyclically levered parts of the market like banks, energy, industrials and others. The recent enactment of the new Covid relief measure has added to inflationary worries that are seen as causing the rise in interest rates.

This is a reasonable conversation ahead of a period of accelerating economic growth in a post-Covid world. But we should view the rising treasury yields as reflective of a favorable growth backdrop that will be reflationary but not necessarily inflationary of the runaway type that will prove disruptive to the outlook.

In other words, I am not worried about rising yields as I see them as reflective of the improving macro backdrop, which should be greatly beneficial to companies operating in the economically sensitive parts of the economy. And while this means that the going will be relatively tougher for the more speculative type of Tech stocks, the more traditional large-cap Tech stocks should remain as profitable and dominant as they were before.

Earnings Expectations

Regular readers of our earnings commentary know that we started seeing a positive shift in the overall earnings picture in July last year. This improving trend in estimate revisions remained in place over the following months and appears to have accelerated over the last few months.

The expectation is for total S&P 500 earnings to increase +18.5% in Q1 from the same period last year on +5.3% higher revenues.

Part of the strong growth in Q1 is reflective of easy comparisons, as the last month of 2020 Q1 had been weighed down by the pandemic, though the full impact showed up in Q2. Those easy comparisons are notable for Finance, Consumer Discretionary, Transportation and Energy sectors.

The Q1 earnings season will really get going when the big banks come out with results on March 14th. The wide majority of companies have fiscal quarters that correspond with the calendar quarters, which is March 31st for Q1.

But there are almost two dozen S&P 500 members that have fiscal quarters that ended in February and three such companies, including Oracle and Costco have reported their fiscal February-ending quarterly results.

We and other data aggregators club the results from these 3 index members as part of the 201 Q1 tally. We have another 5 S&P 500 members on deck to report fiscal February-quarter results this week, including FedEx, Nike and others. Looked at this way, we will have counted almost two dozen such Q4 results before JPMorgan reports its quarterly results on April 14th.

On an index 'EPS' basis, the 2021 expectation works out to $167.85, up from $135.85 per 'Index share' in 2020.

These full-year estimates have been going up as well, with the trend expected to accelerate over the next few months as the vaccination effort reaches a critical mass and greater 'normalcy' returns to life.

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JPMorgan Chase & Co. (JPM) : Free Stock Analysis Report
 
NIKE, Inc. (NKE) : Free Stock Analysis Report
 
Oracle Corporation (ORCL) : Free Stock Analysis Report
 
Costco Wholesale Corporation (COST) : Free Stock Analysis Report
 
FedEx Corporation (FDX) : Free Stock Analysis Report
 
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