After the first week of earnings, analysts have tempered their expectations for profit growth, anticipating a continuation of the profit-declining trend.
The Week That Was: The blended year-over-year earnings of S&P 500 companies are expected to decrease by 0.4%, marking the fourth consecutive decline, according to Factset’s weekly earnings insights report. The decline in earnings is largely due to downward revisions in earnings per share (EPS) estimates for Pfizer, Inc. PFE and Eli Lilly & Co. LLY.
Some of the notable disappointments from the past week include Tesla, Inc. TSLA, Nokia Oyj NOK, Discover Financial Services DFS, and Alcoa Corp. AA, among others. Additionally, there were negative preannouncements from companies like Hewlett Packard Enterprise Co. HPE and SolarEdge Technologies, Inc. SEDG.
Factset data indicates that out of the 17% of the S&P 500 companies that have reported so far, 73% have reported positive earnings per share (EPS) surprises, and 66% have reported positive revenue surprises.
The Week Ahead: With earnings from the financial sector tapering, tech companies are expected to take the spotlight this week. Investors will closely monitor earnings from communication services companies such as Meta Platforms, Inc. META, Snap Inc. SNAP, and Alphabet Inc. GOOG GOOGL, along with software giant Microsoft Corporation MSFT and e-commerce giant Amazon, Inc. AMZN.
Piper Sandler analyst Brent Bracelin anticipates Microsoft to guide to a slight improvement in core growth, driven by a non-cloud recovery in the December quarter. KeyBanc Capital Market’s Michael Turits expects overall in-line September quarter results from the software giant, exercising caution given the ongoing high-rate environment and macro concerns.
“Large channels we spoke to said they were in line or better relative to their expectations with Azure. C4Q Azure expectations were for similar growth,” he added.
For ad-dependent social media companies, the tepid ad-spending environment may present challenges. However, companies like Alphabet have other growth opportunities, including a presence in the cloud market and exposure to AI.
Data from Factset indicates that, among all the S&P sector classes, the communications sector is likely to report the largest year-over-year earnings growth, with Meta leading the charge.
Following the stock pullback in the September quarter, valuations have become compelling for most. Factset reported that the forward 12-month P/E ratio for the S&P 500 is 17.7, below the 5-year average of 18.7 but slightly above the 10-year average of 17.5.
See Also: Best Communication Services Stocks
Key earnings to watch for during the week are:
Monday (after the close)
- Agilysys, Inc. AGYS
- Crane Company CR
- Packaging Corporation of America PKG
- Logitech International S.A. LOGI
Tuesday (before the market opens)
- 3M Company MMM
- Archer-Daniels-Midland Company ADM
- The Coca-Cola Company KO
- Dow Inc. DOW
- General Electric Company GE
- General Motors Company GM
- Halliburton Company HAL
- PulteGroup, Inc. PHM
- Novartis AG NVS
- Spotify Technology S.A. SPOT
- Verizon Communications Inc. VZ
- Xerox Holdings Corporation XRX
Tuesday (after the market close)
- Alphabet
- Boyd Gaming Corporation BYD
- Microsoft
- Snap
- Texas Instruments Incorporated TXN
- Visa, Inc. V
Wednesday (before the market opens)
- General Dynamics Corporation GD
- Norfolk Southern Corporation NSC
- Old Dominion Freight Line, Inc. ODFL
- T-Mobile US, Inc. TMUS
Wednesday (after the market close)
- Canadian Pacific Kansas City Limited CP
- Edwards Lifesciences Corporation EW
- International Business Machines Corporation IBM
- KLA Corporation KLAC
- Mattel, Inc. MAT
- Meta Platforms
- O’Reilly Automotive, Inc. ORLY
Thursday (before the market opens)
- Altria Group, Inc. MO
- Boston Scientific Corporation BSX
- Bristol-Myers Squibb Company BMY
- Comcast Corporation CMCSA
- Hertz Global Holdings, Inc. HTZ
- Hasbro, Inc. HAS
- Mastercard Incorporated MA
- Northrop Grumman Corporation NOC
- Merck & Co., Inc. MRK
- Royal Caribbean Cruises Ltd. RCL
- Southwest Airlines Co. LUV
- STMicroelectronics N.V. STM
- Seagate Technology Holdings plc STX
Thursday (after the market close)
- Amazon
- Arthur J. Gallagher & Co. AJG
- BJ’s Restaurants, Inc. BJRI
- Capital One Financial Corporation COF
- Ford Motor Company F
- Intel Corporation INTC
- SkyWest, Inc. SKYW
Friday (before the market opens)
- Colgate-Palmolive Company CL
- Sanofi SNY
- Exxon Mobil Corporation XOM
- Charter Communications, Inc. CHTR
- AutoNation, Inc. AN
The SPDR S&P 500 ETF Trust SPY, an exchange-traded fund that tracks the performance of the S&P 500 Index, ended Friday’s session down 1.23% at $421.19, according to Benzinga Pro data.
Read Next: Is It Time to Bet on Small Caps? Analysts Share Insights On The Valuation Gap Versus Large Caps
Image via Shutterstock
© 2024 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.
Date | ticker | name | Actual EPS | EPS Surprise | Actual Rev | Rev Surprise |
|---|
Trade confidently with insights and alerts from analyst ratings, free reports and breaking news that affects the stocks you care about.
