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Tech Earnings Expected to Turn Around

Sheraz Mian

Total earnings for the 87 S&P 500 members that have reported Q4 results, as of Monday January 27th, are down -0.1% from the same period last year on +3.4% higher revenues, with 70.1% beating EPS estimates and 72.4% beating revenue estimates.

An above-average proportion of companies are beating revenue estimates. This, coupled with the improving top-line growth trend has to count as momentum on the revenues front. The chart below puts the Q4 revenue beats % and revenue growth rate for these 87 index members relative to what these same companies reported in the first three quarters of 2019.

The earnings focus shifts to the Technology sector, with Apple (AAPL), Facebook (FB), and Amazon (AMZN) and others to deck to report results in the next few days. The sector experienced earnings declines in the last few quarters and the expectation has been that 2019 Q4 will bring this period of earnings declines to an end, with growth resuming in the current period (2020 Q1).

Estimates for the Tech sector still reflect this growth resumption. But last week’s very strong numbers from Intel (INTC) suggest that earnings growth may actually turn positive for the sector in 2019 Q4.

For more details about the Q4 earnings season and expectations for the coming periods, please check out our weekly Earnings Trends report >>>> Q4 Results Show Improving Earnings Picture

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