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Q2 Earnings: Energy and What Else?

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·4 min read
In this article:
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  • (0:45) - Breaking Down Earnings Expectations: Is It All Doom and Gloom?

  • (6:30) - Should We Expect Major Growth From Energy Stocks?

  • (11:10) - Is A Possible Recession Currently Prices Into The Market

  • (17:25) - Where Should Investors Be Looking To Invest Based Off Earnings

  • (26:10) - Episode Roundup: XOM, CVX, HAL, SLB, PM, GILD, GIS, TTE

  • Podcast@Zacks.com

 

Welcome to Episode #321 of the Zacks Market Edge Podcast.

Every week, host and Zacks stock strategist, Tracey Ryniec, will be joined by guests to discuss the hottest investing topics in stocks, bonds and ETFs and how it impacts your life.

This week, Tracey is joined by Sheraz Mian, Zacks Director of Research, to discuss what is happening with second quarter earnings and revenue estimates. Wall Street is expecting the worst. Sheraz confirms that analysts have been cutting going into the reports even though there haven’t been many company warnings.

S&P 500 earnings are expected to be up 2.5% year-over-year on 10.8% higher revenues. But much of that is attributed to energy, which is expected to have another record quarter.

Energy earnings estimates are up 74% since the start of the year. If you exclude energy from the S&P 500, earnings are expected to be down 5.5% on 8.6% higher revenue.

Energy Stocks are on Sale

Energy stocks have sold off double digits in the last 4 weeks, even as the earnings estimates are on the rise.

1.       ExxonMobil XOM

ExxonMobil is a popular oil stock with professional money managers. Shares have fallen 14.4% in the last month and now trade with a forward P/E of just 8.5.

ExxonMobil earnings are expected to rise 90.7% in 2022 to $10.26 from $5.38 last year.

ExxonMobil continues to pay a big base dividend, which is currently yielding 4%.

Should investors be looking at ExxonMobil this earnings season?

2.       Chevron CVX

Chevron shares are cheap in 2022. They trade with a forward P/E of 8.4. It’s not a surprise, then, that Warren Buffett has been buying shares of Chevron for the Berkshire Hathaway portfolio in 2022.

Shares have gone on sale in the last month, falling nearly 20%. Yet earnings are expected to rise 114% to $17.40 versus just $8.13 last year.

Is Chevron a hidden gem?

Back to the Basics

Some investors have been hiding out in the consumer staples, tobacco and drug stocks this year. Many are paying dividends, with some yielding as high as 5%.

3.       Philip Morris International PM

Tobacco companies like Philip Morris International are now popular with some professional money managers as they are paying large dividends.

Philip Morris pays a dividend yielding 5%. Shares have rallied 3.2% year-to-date.

Yet earnings are expected to decline 9% to $5.53.

Should Philip Morris be on your watch list?

4.       Gilead Sciences GILD

Gilead Sciences is popular with investors looking for income. It is yielding 4.7%.

Shares of Gilead Sciences have fallen 14% year-to-date and is now cheap, with a forward P/E of just 9.5.

Earnings are expected to fall 9.5% to $6.59 from $7.28 last year.

Should investors hide out in Gilead this year?

5.       General Mills, Inc. GIS

General Mills recently reported its fiscal fourth quarter earnings results and beat the Zacks Consensus Estimate by 11%. Despite strong inflationary pressures, General Mills still raised its dividend which is yielding 2.7%.

General Mills shares are actually up this year, gaining 11.5%.

Earnings are expected to rise 1.5% this year but aren’t cheap, with a forward P/E of 19.

Should you join the trend of hiding out in General Mills in 2022?

What Else do you Need to Know About the Second Quarter Earnings Season?    

Tune into this week’s podcast to find out.



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Chevron Corporation (CVX) : Free Stock Analysis Report
 
Exxon Mobil Corporation (XOM) : Free Stock Analysis Report
 
Gilead Sciences, Inc. (GILD) : Free Stock Analysis Report
 
General Mills, Inc. (GIS) : Free Stock Analysis Report
 
Philip Morris International Inc. (PM) : Free Stock Analysis Report
 
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