U.S. Markets closed
  • S&P 500

    4,432.99
    -40.76 (-0.91%)
     
  • Dow 30

    34,584.88
    -166.44 (-0.48%)
     
  • Nasdaq

    15,043.97
    -137.96 (-0.91%)
     
  • Russell 2000

    2,236.87
    +3.96 (+0.18%)
     
  • Crude Oil

    71.96
    -0.65 (-0.90%)
     
  • Gold

    1,753.90
    -2.80 (-0.16%)
     
  • Silver

    22.42
    -0.33 (-1.44%)
     
  • EUR/USD

    1.1732
    -0.0040 (-0.3402%)
     
  • 10-Yr Bond

    1.3700
    +0.0390 (+2.93%)
     
  • Vix

    20.81
    +2.12 (+11.34%)
     
  • GBP/USD

    1.3737
    -0.0059 (-0.4286%)
     
  • USD/JPY

    109.8950
    +0.1770 (+0.1613%)
     
  • BTC-USD

    48,497.08
    +1,204.97 (+2.55%)
     
  • CMC Crypto 200

    1,193.48
    -32.05 (-2.62%)
     
  • FTSE 100

    6,963.64
    -63.84 (-0.91%)
     
  • Nikkei 225

    30,500.05
    +176.71 (+0.58%)
     

Zacks Earnings Trends Highlights: Dow, JPMorgan, Chevron and Google

  • Oops!
    Something went wrong.
    Please try again later.
  • Oops!
    Something went wrong.
    Please try again later.
  • Oops!
    Something went wrong.
    Please try again later.
·6 min read
In this article:
  • Oops!
    Something went wrong.
    Please try again later.
  • Oops!
    Something went wrong.
    Please try again later.
  • Oops!
    Something went wrong.
    Please try again later.

For Immediate Release

Chicago, IL – June 3, 2021 – Zacks Director of Research Sheraz Mian says, “Total Q2 earnings for the S&P 500 index are expected to be up +59.3% from the same period last year on +17.6% higher revenues."

Handicapping Q2 Earnings Season

Note: The following is an excerpt from this week’s Earnings Trends report. You can access the full report that contains detailed historical actual and estimates for the current and following periods, please click here>>>

Here are the key points:

  • The market will be looking for the strong earnings momentum we saw in the last reporting cycle to continue in the June-quarter earnings season as well, whose early reports have started coming out already.

  • The expectation is that companies will not only beat seemingly elevated Q2 estimates, but also provide guidance that will help raise estimates for the second half of the year.

  • Total Q2 earnings for the S&P 500 index are expected to be up +59.3% from the same period last year on +17.6% higher revenues, which would follow the +47.6% earnings growth on +8.4% higher revenues in 2021 Q1.

  • A big part of the strong Q2 earnings growth is easy comparisons to the year-earlier period that represented the bottom of the Covid-19 earnings impact. But Q2 estimates also reflect genuine growth, with total index earnings expected to be up +7.8% from the pre-Covid 2019 Q2 period.

  • Total 2021 Q2 earnings for 9 of the 16 Zacks sectors are expected to be up from the pre-Covid 2019 Q2 period, including Technology (up +30%), Basic Materials (+63.8%), Medical (+20.9%), Retail (+23.9%), Construction (+50.1%).

  • Sectors whose 2021 Q2 earnings are expected to remain below the comparable 2019 period include Transportation (down -70.5%), Consumer Discretionary (-52.5%), Autos (-73.3%), and Energy (-17%).

  • Estimates for Q2 and beyond have been steadily going up, with the current +59.3% earnings growth rate up from +50.6% at the end of March and +41.6% at the start of January 2021.

  • Looking at the calendar-year picture for the S&P 500 index, earnings are projected to climb +34.1% on +10.3% higher revenues in 2021 and increase +11.6% on +6.4% higher revenues in 2022. This would follow a decline of -13.1% in 2020 on -1.7% lower revenues.

  • The implied ‘EPS’ for the S&P 500 index, calculated using the current 2021 P/E of 23.1X and index close, as of June 1st, is $182.19, up from $135.91 2020. Using the same methodology, the index ‘EPS’ works out to $203.30 for 2022 (P/E of 20.7X). The multiples have been calculated using the index’s total market cap and aggregate bottom-up earnings for each year.

We continue to believe that positive revisions to estimates is the part of the earnings story that stock market investors should find the most reassuring, as this provides the most convincing fundamental rationale for stocks to hold onto and build on their values. 

In most ‘normal’ periods, we will be seeing negative estimate revisions; meaning earnings estimates would be going down. We are seeing the opposite, with estimates going up.

Please note that this is a replay of what we experienced in Q1 as well, though the pace of positive revisions is stronger for Q2 and beyond. In fact, this trend of positive revisions started back last Summer as the U.S. economy started coming out of the pandemic-driven lockdowns. While the direction of revisions is the same, the pace and magnitude of positive revisions has only accelerated, a trend that we expect will gain further pace in the second half of the year.

The most impressive aspect of this favorable revisions trend is that estimates are going up across the board for most sectors. Of the 16 Zacks sectors, estimates have gone up for 14 sectors since the start of the year, with the Energy, Basic Materials, Construction, Finance and Technology sectors enjoying the largest proportional increases in estimates.

You can see this phenomenon in estimates for bellwether operators in a variety of sectors. Check out, for example, full-year 2021 EPS estimates for Dow DOW, JPMorgan JPM, Chevron CVX and Alphabet GOOGL and you will find that EPS estimates have gone up +80.2%, +22.7%, +61.4% and +27.3% over the past three months, respectively.

The Earnings Big Picture

We remain positive in our earnings outlook, as we see the full-year 2021 growth picture steadily improving, with the aforementioned revisions trend accelerating in the back half of the year.

More Stock News: This Is Bigger than the iPhone!

It could become the mother of all technological revolutions. Apple sold a mere 1 billion iPhones in 10 years but a new breakthrough is expected to generate more than 77 billion devices by 2025, creating a $1.3 trillion market.

Zacks has just released a Special Report that spotlights this fast-emerging phenomenon and 4 tickers for taking advantage of it. If you don't buy now, you may kick yourself in 2022.

Click here for the 4 trades >>

Follow us on Twitter:  https://twitter.com/zacksresearch

 

Join us on Facebook:  https://www.facebook.com/home.php#/pages/Zacks-Investment-Research/57553657748?ref=ts

 

Zacks Investment Research is under common control with affiliated entities (including a broker-dealer and an investment adviser), which may engage in transactions involving the foregoing securities for the clients of such affiliates.

 

Media Contact

Zacks Investment Research

800-767-3771 ext. 9339

support@zacks.com

https://www.zacks.com

 

Zacks.com provides investment resources and informs you of these resources, which you may choose to use in making your own investment decisions. Zacks is providing information on this resource to you subject to the Zacks "Terms and Conditions of Service" disclaimer. www.zacks.com/disclaimer.

 

Past performance is no guarantee of future results. Inherent in any investment is the potential for loss.This material is being provided for informational purposes only and nothing herein constitutes investment, legal, accounting or tax advice, or a recommendation to buy, sell or hold a security. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. It should not be assumed that any investments in securities, companies, sectors or markets identified and described were or will be profitable. All information is current as of the date of herein and is subject to change without notice. Any views or opinions expressed may not reflect those of the firm as a whole. Zacks Investment Research does not engage in investment banking, market making or asset management activities of any securities. These returns are from hypothetical portfolios consisting of stocks with Zacks Rank = 1 that were rebalanced monthly with zero transaction costs. These are not the returns of actual portfolios of stocks. The S&P 500 is an unmanaged index. Visit https://www.zacks.com/performance for information about the performance numbers displayed in this press release.


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
 
JPMorgan Chase & Co. (JPM) : Free Stock Analysis Report
 
Chevron Corporation (CVX) : Free Stock Analysis Report
 
Dow Inc. (DOW) : Free Stock Analysis Report
 
Alphabet Inc. (GOOGL) : Free Stock Analysis Report
 
To read this article on Zacks.com click here.
 
Zacks Investment Research