For Immediate Release
Chicago, IL – September 14, 2020 – Zacks.com releases the list of companies likely to issue earnings surprises. This week’s list includes Oracle Corporation ORCL, Zoom Video Communications, Inc. ZM, Lennar Corporation LEN, Adobe Inc. (ADBE) and FedEx Corporation FDX.
Q3 Earnings Season Gets Underway
The market is struggling with Oracle’s interest in TikTok, but it has no trouble appreciating the resumption of growth momentum in its cloud business as it reported better-than-expected fiscal August-quarter results on Thursday, September 10.
Oracle’s earnings increased +5.4% from the same period last year on +1.6% higher revenues, but its cloud revenues increased +9% on the back of new and increased business from the likes of Zoom Video and others. The company’s TikTok crush is supposedly part of its cloud push as well, but it is not clear how the TikTok crowd will sync in with its existing audience.
Oracle’s quarterly report will get counted as part of the September-quarter tally of results that will really get going when the big banks come out with results on October 20th. But we will have a number of other important companies report August-quarter results ahead of the mid-October banks results and all of those reports will form part of our 2020 Q3 earnings season tally.
As such, the Oracle earnings release is the first quarterly report of an S&P 500 member for the Q3 earnings season. Lennar, Adobe and FedEx are other index members that are on deck to report August-quarter results this week that will also get counted as Q3 results.
For Q3 as a whole, total S&P 500 earnings are expected to decline -23.7% from the same period last year on -3.3% lower revenues. This would follow the -32.5% decline in Q2 when economic and business activities came to a halt as a result of the pandemic driven lockdowns.
The earnings outlook has been steadily improving since the start of Q3, as economic and business activities have resumed. The chart below of how estimates for 2020 Q3 have evolved since early July clearly shows that the revisions trend has turned positive.
The positive revisions trend continues after Q3 to Q4 and beyond. Estimates have not moved up that much over the last few weeks, but they have nevertheless remained stable.
At the sector level, Q3 earnings are expected to be below the year-earlier level for 14 of the 16 Zacks sectors, with Construction (+4.3% earnings growth) and Medical (+0.1%) the only sectors expected to have positive earnings growth. Sectors with the biggest declines include Transportation (-128.3% earnings decline), Energy (-97.4%), Consumer Discretionary (-89.3%), Conglomerates (-50.2%), Aerospace (-47.1%), and Autos (-35.5%).
For the Finance sector, Q3 earnings are expected to be down -25.6% on -1.8% lower revenues, which would follow the sector’s -45.2% earnings decline on -1.6% lower revenues. Tech sector earnings are expected to be down -4.7% on +3.8% higher revenues.
For an in-depth look at the overall earnings picture and expectations for the coming quarters, please check out our weekly Earnings Trends report >>>> Looking Ahead to the Q3 Earnings Season
The Hottest Tech Mega-Trend of All
Last year, it generated $24 billion in global revenues. By 2020, it's predicted to blast through the roof to $77.6 billion. Famed investor Mark Cuban says it will produce "the world's first trillionaires," but that should still leave plenty of money for regular investors who make the right trades early.
See Zacks' 3 Best Stocks to Play This Trend >>
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.
Zacks Investment Research
800-767-3771 ext. 9339
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
Oracle Corporation (ORCL) : Free Stock Analysis Report
FedEx Corporation (FDX) : Free Stock Analysis Report
Lennar Corporation (LEN) : Free Stock Analysis Report
Zoom Video Communications, Inc. (ZM) : Free Stock Analysis Report
To read this article on Zacks.com click here.
Zacks Investment Research