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Earnings Season On Deck: How Has Q3 Guidance Looked So Far?

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Earnings Season On Deck: How Has Q3 Guidance Looked So Far?

Third-quarter reporting season is barely upon us, with Alcoa Inc (NYSE: AA), officially or unofficially, chiming the season in. The tidings weren't exactly encouraging. Despite the aluminum giant having lost its luster as a bellwether, its results did have the gravity to move the markets.

Alcoa's Foreboding

After reporting misses, both on its top and bottom lines, the company also whined about revenue issues in its fast growing businesses, which it plans to spin off as a separate entity called Arconic.

Alcoa's quarterly results along with some negative pre-announcements and a pullback in oil prices sent stocks tumbling on Tuesday.

As the public awaits further earnings news flow over the course of the next few weeks, here are some prognoses concerning how the season could pan out.

Related Link: Big Banks To Kick Off New Earnings Season With Mixed Results?

Earnings, Sales Warnings

  • Chatham Lodging Trust (NYSE: CLDT) lowered estimates for a host of third-quarter metrics, blaming the potential shortfall on tougher comparisons and macroeconomic weakness.
  • Dover Corp (NYSE: DOV) lowered its full-year 2016 earnings per share and revenue guidance and issued below-consensus third-quarter bottom-line guidance.
  • Fortinet Inc (NASDAQ: FTNT) lowered its third-quarter billings guidance by 8 percent, blaming it on lengthening deal cycles and sales execution challenges in North America. Revenues are now expected to be 2.5 percent lower and earnings per share $0.02 lower. The stock was down close to 10 percent.
  • Horizon Pharma PLC (NASDAQ: HZNP) lowered its 2016 adjusted EBITDA guidance, citing higher operating expenses.
  • Illumina, Inc. (NASDAQ: ILMN)'s travails are far from over, as it warned of a potential shortfall in the third quarter top line and a possible miss in the fourth quarter amid growth pangs, as it transitions from a mature academic research market to a relatively nascent and challenging clinical market. After a 25 percent slide on Tuesday, the stock was lower yet again on Wednesday.
  • Swedish telecom equipment maker Telefonaktiebolaget LM Ericsson (NASDAQ: ERIC) warned of a drop in third-quarter revenues and a near wipe out of its operating profits, as it grapples with reduced spending by telecom companies in the emerging markets and Europe. The stock reacted with a steep over 20 percent drop.

Upping Estimates

  • Health insurer Humana Inc (NYSE: HUM), which is set to merge with Aetna Inc (NYSE: AET), raised its 2016 adjusted earnings per share estimate above the consensus estimate. Notwithstanding the positive tidings, the insurer's shares fell over 6 percent on declines in membership in plans rated four stars or higher.
  • Mobileiron Inc (NASDAQ: MOBL) raised its third-quarter revenue and gross billings guidance for the third quarter.
  • Organovo Holdings Inc (NASDAQ: ONVO) pre-announced a strong increase in its fiscal year 2017 second-quarter revenues. The company also raised its full-year revenue guidance.
  • Seagate Technology PLC (NASDAQ: STX) pre-announced a revenue beat for its fiscal first quarter, attributing the strength to demand for enterprise-grade hard drives.
  • Software firm Twilio Inc (NYSE: TWLO) issued upbeat preliminary third-quarter results.

Comfortable With Estimates

  • PPL Corp (NYSE: PPL) reaffirmed its 2016 and 2017 earnings per share estimate and its CAGR target for earnings for the period from 2017 to 2020.

Takeaways

Investors are well advised to brace for rough weather, as more and more companies cutting across sectors seem to hit the panic button ahead of the D-day. The tech space could be a saving grace, as seen by early indications from some companies. Even the earnings beats should be taken with a pinch of salt, as companies could be scaling lowered bars. That said, some of the companies, which reported ahead of Alcoa, including Nike Inc (NYSE: NKE) and PepsiCo, Inc. (NYSE: PEP) did beat estimates. Until the results are out, it is crystal ball gazing for investors amid the uncertain macroeconomic conditions.

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