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Oracle, Zoom Video, Lennar, Adobe and FedEx are part of Zacks Earnings Preview

Zacks Equity Research

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. LennarAdobe 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

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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.

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Oracle Corporation (ORCL) : Free Stock Analysis Report
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Zoom Video Communications, Inc. (ZM) : Free Stock Analysis Report
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