The earnings season has already started and the picture, so far, appears to be encouraging. Per the Earnings Preview dated Jan 19, nearly 53 of the S&P 500 members have reported their results. Out of these companies, approximately 81.1% delivered positive earnings surprises, while 75.5% surpassed top-line expectations.
Notably, earnings for the 53 S&P 500 companies have advanced 11.7% from the same period last year, with revenues up 7.5%. Further, the report suggests that earnings for the total S&P 500 companies for the fourth quarter are projected to improve 10.3% year over year, with total revenues increasing 7.1%.
Tech Stocks Continue to Outperform
Technology is one of the six sectors anticipated to report double-digit earnings growth. The other five are Oil/Energy, Basic Materials, Industrial Products, Construction and Autos. Various technology giants, including Intel INTC and Netflix NFLX, are scheduled to report their numbers this week. Per the report, total earnings for the tech sector are projected to be up 14.3% on 8.7% higher revenues.
We note that the technology sector has been a robust performer over the past year. The sector is benefiting from the increasing demand for cloud-based platforms, growing adoption of Artificial Intelligence (AI) solutions, Augmented/Virtual reality devices, autonomous cars, advanced driver assisted systems (ADAS) and Internet of Things (IoT) related software.
Not All Companies are Poised to Impress
Though the overall tech sector is poised to shine in the quarter to be reported, this does not ensure earnings beat for all companies in the space. It should be noted that a company’s earnings outperformance is dependent on the overall business environment as well as management’s ability to implement operating and strategic plans.
In other words, a company may perform poorly despite a favorable business environment if it fails to capitalize on the opportunities due to lack of execution.
Let’s See How LRCX, TEL, APH, XLNX and FFIV are Placed
Supplier of wafer fabrication equipment and services, Lam Research Corporation LRCX, is set to report second-quarter fiscal 2018 results. The Zacks Consensus Estimate for the company’s revenues and earnings are pegged at $2.56 billion and $3.67, respectively, for the to-be-reported quarter. Estimates, when compared with the year-ago quarter’s figures, indicate remarkable growth of 36% for revenues and 63.8% for earnings. The stock has a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Lam Research Corporation Price and EPS Surprise
Lam Research Corporation Price and EPS Surprise | Lam Research Corporation Quote
Lam Research's fiscal second-quarter results are likely to benefit from the improving WFE market, elevated demand for server DRAM and increased adoption rates of 3D NAND technology. This is driven by cloud computing, big data, mobile devices and IoT. The company has undertaken cost-reduction activities, and density scaling for 3D NAND and new memory technologies. All these factors will positively impact the top- and bottom-line figures of the company. (Read: Can Strong Memory Save Lam Research in Q2 Earnings?)
Designer, manufacturer, and seller of connectivity and sensors solutions, TE Connectivity Ltd. TEL, is scheduled to report first-quarter fiscal 2018 results. The Zacks Consensus Estimate for earnings and revenues are pegged at $1.25 and $3.37 billion, respectively. Estimates, when compared with the year-ago quarter’s actual figures, indicate growth of 8.7% for earnings and 9.9% for revenues. The company carries a Zacks Rank #2.
TE Connectivity Ltd. Price and EPS Surprise
TE Connectivity Ltd. Price and EPS Surprise | TE Connectivity Ltd. Quote
The company is likely to benefit from sturdy demand in end markets, along with its overarching business model and continued progress on strategic priorities. The company’s Commercial transportation business has been displaying remarkable signs of progress, driven by content expansion in the heavy truck market, especially in China.
Growth in electronic content and a rich pipeline of platform ramps from design wins bode well for its transportation business. Additionally, the sensor business is anticipated to record solid design win momentum, fueled by growth of the automotive space, which is likely to prove conducive to upcoming results. (Read: What's in Store for TE Connectivity in Q1 Earnings?)
Let’s take a sneak peek at Amphenol Corporation APH which is scheduled to report fourth-quarter 2017 results. The Zacks Consensus Estimate for the company’s revenues and earnings are pegged at $1.79 billion and 81 cents, respectively, for the to-be-reported quarter. Estimates, when compared with the year-ago quarter’s figures, indicate growth of 8.3% for revenues and 8% for earnings. The stock has a Zacks Rank #3 (Hold).
Amphenol Corporation Price and EPS Surprise
Amphenol Corporation Price and EPS Surprise | Amphenol Corporation Quote
Amphenol’s top-line growth is likely to benefit from improved end-market demand, product roll outs and market-share gains. Demand continues to be strong in the automotive, industrial and military markets. In addition, Amphenol remains encouraged by its expanding presence in the fast-growing commercial aerospace market and is well positioned to capitalize on the proliferation of electronics content in next-generation planes. These advanced electronic systems require new advanced technology interconnect solutions to enhance fuel efficiency and improve passenger experience, all of which create excellent opportunities for the company. (Read: Will Amphenol Beat Q4 Earnings on Improved Demand?)
The semiconductor company, Xilinx Inc. XLNX, will report third-quarter fiscal 2018 results. The Zacks Consensus Estimate for the quarter under review is pegged at 63 cents, which represents a 21.2% increase from the year-ago figure of 52 cents. Additionally, analysts polled by Zacks project revenues of roughly $630 million, up 7.6% from the prior-year quarter. The stock has a Zacks Rank #3.
Xilinx, Inc. Price and EPS Surprise
Xilinx, Inc. Price and EPS Surprise | Xilinx, Inc. Quote
We expect strong adoption of its FPGA products in the Automotive and Aerospace and Defense markets to drive Xilinx's fiscal third-quarter sales. However, escalating operating expenses might impede bottom-line growth. (Read: Factors to Look for Ahead of Xilinx's Q3 Earnings)
Another tech company F5 Networks, Inc. FFIV is slated to release first-quarter fiscal 2018 results. The Zacks Consensus Estimate for the quarter is pegged at $2.04, which represents a meagre 3% increase from the year-ago figure. Additionally, analysts polled by Zacks project revenues of roughly $521.5 million, up just 1.1% from the year-ago quarter. The stock has a Zacks Rank #3.
F5 Networks, Inc. Price and EPS Surprise
F5 Networks, Inc. Price and EPS Surprise | F5 Networks, Inc. Quote
F5 Networks' sustained focus on product refreshes remains a tailwind. However, increasing competition and a volatile spending environment might undermine its results. (Read: What's in the Cards for F5 Networks in Q1 Earnings?)
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Netflix, Inc. (NFLX) : Free Stock Analysis Report
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