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Q2 Earnings Season Scorecard and Analyst Reports for Broadcom, Oracle, & Danaher

·7 min read

Tuesday, July 26, 2022
The Zacks Research Daily presents the best research output of our analyst team. Today's Research Daily features a real-time scorecard of the onoging Q2 earnings season and new research reports on 16 major stocks, including Broadcom Inc. (AVGO), Oracle Corporation (ORCL), and Danaher Corporation (DHR). These research reports have been hand-picked from the roughly 70 reports published by our analyst team today.
You can see all of today’s research reports here >>>

Q2 Earnings Season Scorecard

Including all the reports that came out before the market's open on July 26th, we now have Q2 results from 134 S&P 500 members or 26.8% of the index's total membership. Total earnings for these companies are down -5.8% from the same period last year on +7.9% higher revenues, with 73.9% beating EPS estimates and 64.2% beating revenue estimates.

This is the lowest EPS and revenue beats percentage for this group of 134 index members since the first quarter of 2020 and towards the low end of the 5-year range.

Weak earnings growth for the Finance sector is the primary reason the aggregate reported Q2 earnings growth rate is in negative territory. Excluding the -26.2% decline in Finance sector earnings, Q2 earnings growth for the rest of the index companies that have reported improves to +9.8%. Looking at Q2 as a whole, combining the actuals that have come out with estimates for the still-to-come companies, earnings are expected to be up +3.7% as a whole and +10% on an ex-Finance basis.

Estimates for the current period (2022 Q3) have started coming down, though persistent positive revisions to the Energy sector is partly offsetting those cuts, a trend that we saw with respect to Q2 estimates as well. Total Q3 earnings are currently expected to be up +6.1% on +9.2% higher revenues.

Excluding the Energy sector's substantial contribution, total Q3 earnnings for the rest of the index would be up only +0.6%, which is down from +2.1% growth expected at the start of July. For more details about the Q2 earnings season, please check out our weekly Earnings Preview report where this week provided a preview for the Tech sector >>>>Previewing Big Tech Earnings Ahead of a Huge Week for Wall Street 

Today's Featured Research Reports

Broadcom shares have outperformed the Zacks Electronics - Semiconductors industry over the past year (+11.1% vs. -1.1%) on the back of continued strength in networking and server storage segments. Networking is well-poised on strong adoption of Broadcom’s next-gen merchant switching and routing solutions by hyperscalers, enterprises and service providers.

It is benefiting from the world’s first complete end-to-end chipset solutions for the Wi-Fi 7 ecosystem. In the server storage connectivity domain, much of the growth is anticipated from the continued recovery of enterprise IT spending deployed toward upgrading computer services.

An upbeat third-quarter fiscal 2022 guidance is encouraging. The recently announced VMware acquisition will aid prospects in the long term. However, increasing competition, along with high debt levels, are persistent woes.

(You can read the full research report on Broadcom here >>>)

Oracle shares have declined -13.1% over the year-to-date basis against the Zacks Computer - Software industry’s decline of -24.1%. The Zacks analyst believes higher spending on product enhancements, especially toward the cloud platform, amid increasing competition in the cloud domain is likely to limit margin expansion.

However, ongoing momentum across its cloud business, driven by the strong uptake of Oracle Cloud Infrastructure services and Autonomous Database offerings. Solid adoption of cloud-based applications, comprising NetSuite Enterprise Resource Planning (ERP), Fusion ERP and Fusion Human Capital Management (HCM), bodes well.

Solid demand for the Oracle Dedicated Region Cloud customer is anticipated to drive the top line. Partnerships with Accenture and Microsoft is helping Oracle win new clientele. The company’s share buybacks and dividend policy are noteworthy

(You can read the full research report on Oracle here >>>)

Danaher shares have declined -5.7% over the past year against the Zacks Diversified Operations industry’s decline of -23.3%. The company’s cost inflation and woes related to supply-chain restrictions might be worrying for the company in the quarters ahead. High debts might inflate financial obligations and forex woes are likely to be concerning for Danaher.

However, Danaher’s diversified business structure allows it to mitigate risks in one end market with strength across others. The company stands to benefit from Danaher Business System (“DBS”), healthy rewards to shareholders, buyout benefits and product innovation in the quarters ahead.

It anticipates year-over-year core revenue growth of low-single digit for the second quarter of 2022. Danaher is slated to release second-quarter results on Jul 21. The impact of COVID-related testing is predicted to boost sales in the low-single digits for the second quarter

(You can read the full research report on Danaher here >>>)

Other noteworthy reports we are featuring today include Bristol-Myers Squibb Company (BMY), Deere & Company (DE) and Northrop Grumman Corporation (NOC).

Sheraz Mian
Director of Research

Note: Sheraz Mian heads the Zacks Equity Research department and is a well-regarded expert of aggregate earnings. He is frequently quoted in the print and electronic media and publishes the weekly Earnings Trends and Earnings Preview reports. If you want an email notification each time Sheraz publishes a new article, please click here>>>

Today's Must Read

Strong Demand for Networking Products Aids Broadcom (AVGO)

Oracle (ORCL) Gains from Cloud Suite Adoption & Partnerships

Life Sciences Business Drive Danaher (DHR), High Costs Ail

Featured Reports

Eliquis, Opdivo Fuel Bristol (BMY) Amid Generic Competition
Per the Zacks analyst, strong demand for Eliquis and Opdivo fuel growth for Bristol Myers. However, one of the top revenue generators Revlimid is facing generics, which will impact sales.

Solid Demand Aids Northrop (NOC), Supply Chain Turmoil Woes
Per the Zacks analyst, strong global demand for its products like Triton and E-2D Advanced Hawkeyes steadily boosts Northrop. Yet COVID-19 induced supply chain disruption might hurt the stock.

Lyft (LYFT) Gets a Boost From Improvement in Ride Volumes
The Zacks analyst is impressed with the uptick in revenues owing to expansion in ride volumes. Increase in driver supply is driving Lyft's ride volumes.

Travelers' (TRV) Auto & Homeowners Aids, Cat Loss Hurts
Per the Zacks analyst, persistent progress and strong market of the auto and homeowners businesses contribute to revenue growth of the company. However, exposure to catastrophe loss remains a headwind

Higher Rates to Aid SVB Financial (SIVB) Amid Cost Woes
Per the Zacks analyst, loan growth and higher rates will likely aid SVB Financial's margin growth in the near term. However, elevated expenses due to its investments in technology will hurt profits.

Deere (DE) Rides on Farm Equipment Demand Amid Higher Costs
Per the Zacks analyst, Deere will gain from increased farm equipment demand driven by higher commodity prices despite escalating material and logistic costs.

Acuity Brands' (AYI) Innovative Portfolio Aid, Inflation Ail
Per the Zacks analyst, Acuity Brands' diversified portfolio of innovative lighting control solutions and energy-efficient luminaries bode well. Yet, inflationary pressure and supply chain woes hurt.

New Upgrades

Cheniere (LNG) to Gain from Sustained Gas Export Strength
The Zacks analyst believes that being one of the few liquefied natural gas exporters of the U.S., Cheniere Energy is set to capitalize on the sustained strength in shipments to Europe and Asia.

Hershey (HSY) Benefits From Prudent Buyouts & Solid Pricing
Per the Zacks analyst, Hershey's contributions from buyouts and higher prices are driving growth. The buyouts of Pretzels, Dot's and Lily's boosted net sales by 4.6 points in first-quarter 2022.

Illumina (ILMN) Rides on Robust Demand for NextSeq & NovaSeq
The Zacks analyst is encouraged by Illumina's high NovaSeqs consumables and instruments shipments for clinical customers. Strong market adoption of NextSeq 1000 and 2000 platforms is encouraging.

New Downgrades

Universal Display (OLED) Plagued by Margin Woes, Chip Deficit
Per the Zacks analyst, Universal Display continues to face pandemic-triggered disruptions, chip shortage and supply chain constraints, while high operating expenses weigh on its profitability.

Conagra (CAG) Gross Margin Troubled by Input Cost Inflation
Per the Zacks analyst, Conagra Brands has been battling cost of goods sold inflation, which hurt gross margin in fourth quarter. In fiscal 2023, management expects gross inflation in low-teens range.

Twitter (TWTR) Suffers from Slow Ad Demand, Buyout Uncertainty
Per the Zacks analyst, Twitter suffers from slow advertising demand due to macroeconomic headwinds and uncertainty related to the pending acquisition of Twitter by an affiliate of Elon Musk.

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
Northrop Grumman Corporation (NOC) : Free Stock Analysis Report
Bristol Myers Squibb Company (BMY) : Free Stock Analysis Report
Danaher Corporation (DHR) : Free Stock Analysis Report
Deere & Company (DE) : Free Stock Analysis Report
Oracle Corporation (ORCL) : Free Stock Analysis Report
Broadcom Inc. (AVGO) : Free Stock Analysis Report
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