Q3 Earnings Season Scorecard and Analyst Reports for Danaher, Comcast & Starbucks

Tuesday, October 25, 2022

The Zacks Research Daily presents the best research output of our analyst team. In today's Research Daily, we provide the updated Q3 earnings season scorecard, in addition to featuring new research reports on 12 major stocks, including Danaher Corporation (DHR), Comcast Corporation (CMCSA) and Starbucks Corporation (SBUX).

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 >>>

Q3 Earnings Season Scorecard

Including all of this morning's results, we now have Q3 results from 129 S&P 500 members or 25.8% of the index's total membership. Total earnings for these companies are down -0.5% from the same period last year on +10.1% higher revenues, with 73.6% beating EPS estimates and 64.3% beating revenue estimates.

The Q3 earnings and revenue growth pace and the EPS beats percentage for this group of 129 index members is better than what we saw from this group in the preceding period. The revenue beats percentage for this group of 129 index members at 64.3% is modestly below the 66.7% for this group in 2022 Q2, but otherwise well within the historical range.

This is a reassuring showing on the corporate earnings front that runs counter to pre-season fears of an impending earnings cliff that will result in companies overwhelmingly guiding lower. We have seen some of those. But for the most part, management teams have either guided higher, reaffirmed previous outlook or provided favorable qualitative commentary.

A case in point is this mornig's UPS report whose reaffirmed guidance ran counter to what we had heard from FedEx a few weeks back. While 3M guided lower, Coke and GM provided favorable commentary.

With respect to the coming periods, expectations are getting reset lower, as we have consistently been pointing out all along.

S&P 500 earnings for the last quarter of the year (2022 Q4) are currently expected to be up only +0.1% from the same period last year, which is down from +1.1% on October 19th and +2.5% on August 31st. Excluding contribution from the Energy sector, Q4 earnings for the remainder of the index are currently expected to be down -4% from the year-earlier period, which is down from -3.6% on October 19th and -1.9% on August 31st.

Full year 2023 expectations are similarly coming down.

For more details about the evolving earnings picture, please check out our weekly Earnings Preview article >>>>Here's What to Expect from Big Tech Earnings

Today's Featured Research Reports

Shares of Danaher have declined -17.7% over the past year against the Zacks Diversified Operations industry’s decline of -25.4%. High raw material costs, and component shortages, due to supply chain issues, are weighing on the company’s operations. Coronavirus-induced headwinds in China add to its woes. Adverse foreign currency movements are affecting Danaher’s top line.

However, strong segmental performances are driving Danaher’s growth. Robust activity in bioprocessing and strength in instrument business are boosting the Life Sciences unit’s performance. Robust growth in Beckman Coulter Diagnostics and Molecular Diagnostics is acting as a catalyst to the Diagnostics segment’s growth. Inorganic activities are contributing to the company’s top line growth. Danaher’s efforts to reward its shareholders through dividends are encouraging.

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

Comcast shares have declined -42.5% over the past year against the Zacks Cable Television industry’s decline of -47.0%. The company is persistently suffering from video-subscriber attrition due to cord cutting. Moreover, a leveraged balance sheet is a major concern.

Though Comcast is benefiting from a growing wireless subscriber base. Slowing broadband user base addition primarily due to reversal of pandemic trends and increased competition from fixed wireless as well as fiber are concerns.

Nevertheless, Comcast’s plan to transition to DOCSIS 4.0 is noteworthy. The technology will help the company in expanding much faster and at a lower cost compared to competitors. Recovery in park and movie business bodes well for Comcast’s profitability. Its streaming service Peacock is a key catalyst in driving broadband sales. Strong free cash flow generation ability is noteworthy.

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

Starbucks shares have underperformed against the Zacks Retail - Restaurants industry over the past year (-26.1% vs. -13.5%). The company’s performance continues to be negatively impacted by dismal China results, higher-than-expected inflationary pressures, increased costs and a tight labor market. The company believes that performance will be under massive pressure for the rest of the year.

However, Starbucks has been benefiting from operating fundamentals such as a solid global footprint, successful innovations and digital offerings. North America comps continue to impress investors.

For fiscal 2023 to 2025, Starbucks anticipates global and U.S. comparable store sales growth between 7% and 9% year over year. For fiscal 2023 to 2025, it expects its global store portfolio to increase approximately 7% annually, up from the prior estimate of 6%.

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

Other noteworthy reports we are featuring today include Fomento Económico Mexicano, S.A.B. de C.V. (FMX), The TJX Companies, Inc. (TJX) and Stryker Corporation (SYK).

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

Danaher (DHR) Backed by Life Sciences Segment Amid Cost Woes

Wireless Subscriber Gain Drives Comcast's (CMCSA) Prospects

Store Growth Aids Starbucks (SBUX), Dismal China Comps Hurts

Featured Reports

Investments in Specialized Distribution to Aid FEMSA (FMX)
Per the Zacks analyst, FEMSA has been on track with its strategy of creating a national distribution platform in the United States, through the expansion in the specialized distribution industry.

Diversified Product Portfolio Drives Stryker's (SYK) Prospects
Per the Zacks analyst, Stryker's diversified product portfolio, which include the robust Mako total knee platform, should support the growth of its global business.

The TJX Companies (TJX) Gains From Store & E-Commerce Growth
Per the Zacks analyst, The TJX Companies is gaining on its store and e-commerce growth efforts. The company aims at growing its global store base by at least another 1,500 stores in current locations.

Acquisitions and Solid Cash Flows Aid Global Payments (GPN)
Per the Zacks Analyst, buyouts and tie-ups added capabilities to the company's portfolio, which in turn, boosted revenues. Also, strong cash flows drive investments in business.

Ovintiv (OVV) to Gain from Multi-Basin Assets, Debt a Worry
The Zacks analyst likes Ovintiv's well-established presence in some of North America's highest-quality oil and gas basins but is worried over its high debt-to-capitalization of 40.1%.

Solid User Growth & Premium Content Demand Aids Snap (SNAP)
Per the Zacks analyst, Snap benefits from an improving user growth driven by strong adoption of Augmented Reality (AR) Lenses and demand for premium content including Shows.

Clean Assets, North America Focus Aid Clearway Energy (CWEN)
Per the Zacks analyst Clearway Energy is gaining by generating electricity from renewable energy sources to meet rising demand and focus on domestic market saves it from currency risks.

New Upgrades

Electronic Focus & Low Costs Aid Interactive Brokers (IBKR)
Per the Zacks analyst, Interactive Brokers' continued focus on the Electronic Brokerage segment along with lower level of compensation costs and development of proprietary software will aid profits.

U.S. Cellular (USM) Rides on Healthy Demand, Customer Growth
Per the Zacks analyst, U.S. Cellular is well positioned to benefit from healthy customer growth, additional demand for data and migration through equipment installment plans and competitive pricing.

Catalyst (CPRX) Rides on Robust Performance of Firdapse
Per the Zacks analyst, solid performance of Catalyst's approved drug, Firdapse, has fueled its growth. Firdapse's recent label expansion for LEMS in children is expected to be a top-line booster.

New Downgrades

Equifax (EFX) Endures Persistent Weakness in Current Ratio
Per the Zacks analyst, Equifax has been seeing lower current ratio for a while. The company's current ratio at the end of the September quarter was pegged at 0.64, below the prior-year quarter's 1.53.

Economic Uncertainty & Elevated Leverage to Ail Lithia (LAD)
The Zacks analyst is worried over rising cost of vehicle financing and recession worries which may dampen car demand, thus hurting Lithia's sales. Huge debt pile of over $5 billion is also a spoiler.

Uncertainties Weigh Down on CBRE Group's (CBRE) Performance
Per the Zacks Analyst, the prevailing macroeconomic uncertainty and rising geopolitical tension are likely to weigh down upon CBRE Group's performance in the near term.

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Comcast Corporation (CMCSA) : Free Stock Analysis Report
 
The TJX Companies, Inc. (TJX) : Free Stock Analysis Report
 
Starbucks Corporation (SBUX) : Free Stock Analysis Report
 
Stryker Corporation (SYK) : Free Stock Analysis Report
 
Danaher Corporation (DHR) : Free Stock Analysis Report
 
Fomento Economico Mexicano S.A.B. de C.V. (FMX) : Free Stock Analysis Report
 
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