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Expeditors International, Norwegian Cruise line, WalMart and Deere are part of Zacks Earnings Preview

For Immediate Release

Chicago, IL – February 18, 2020 – Zacks.com releases the list of companies likely to issue earnings surprises. This week’s list includes Expeditors International EXP, Norwegian Cruise line NCLH, WalMart WMT and Deere DE.

Key Takeaways from Q4 Earnings Season

With more than three quarters of Q4 results already in, we can confidently say that overall earnings picture continues to improve. As we indicated here last week, these quarterly results continue to show earnings growth on track to turn positive in Q4 and momentum on the revenues side.

The revisions trend, which earlier on appeared to be shifting favorably, has been on a negative trend for the last few weeks, with the virus outbreak adding to the historical pattern. That said, the magnitude of negative cuts to current-period estimates still compares favorably to the recent past.

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We share below the three main takeaways from the results thus far. Please note that through Friday, February 14th, we have seen Q4 results from 388 S&P 500 members or 77.6% of the index’s total membership. We aren’t quite that further along in the Q4 reporting cycle for the small-cap stocks, with results from only 43.8% of the S&P 600 index out through Friday, February 14th.

First, momentum on the revenues side: For the 388 index members that have reported already, total earnings and revenues are up +1.3% and +4.8%, respectively. The proportion of these companies beating EPS and revenue estimates is 72.9% and 66.2%, respectively.

A much bigger proportion of companies are beating top-line estimates, with the EPS beats percentage actually tracking below historical periods. The revenues growth rate doesn’t show the same level momentum, but it has nevertheless held up fairly well.

Second, earnings growth is on track to turn positive in Q4: As we saw earlier, earnings for the 388 index members that have reported already are up +1.3% from the same period last year. For the quarter as a whole, combining the results that have come out with estimates for the still-to-come companies, Q4 earnings are expected to be up +0.8% on a year-over-year basis.

This blended Q4 earnings growth rate turned positive last week for this earnings season and modestly nudged up this week. This would follow the -1.7% decline in S&P 500 earnings in the preceding period (2019 Q3) and growth rates of +0.6% and -0.1% in 2019 Q2 and Q1, respectively.

Please note that the anemic earnings growth pace in 2019 is primarily because of tough comparisons to the 2018 numbers that were boosted by the tax cut legislation. ‘Normal’ growth resumes in the current period (2020 Q1) and accelerates into the back half of the year and beyond. 

Third, current period estimates are coming down, with the Coronavirus outbreak adding to the typical negative revision that would take place any way. We got off to a good start with respect to estimate revisions for 2020 Q1, but that has clearly reversed over the last few weeks.

It is totally normal for current-period estimates to be coming down as companies release their quarterly results and the magnitude of negative revisions to Q1 estimates still compares favorably to historical periods. But the additional factor this time around is the Coronavirus outbreak that has clear negative earnings implications, as many companies have publicly acknowledged. The full extent of the virus outbreak will only become clearer over time. We don’t know at this stage whether the outbreak’s negative impact will be a one quarter phenomenon or will it seep into the following periods as well.

This week’s docket of earnings releases include a number of companies whose results can be expected to be significantly exposed to the outbreak. These include logistics operator Expeditors International and cruise line operator Norwegian Cruise line.

Overall, we have more than 450 companies on deck to report results this week, including 49 S&P 500 members. Wal-Mart and Deere are some of the other notable companies reporting results this week.

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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.

 

 


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Deere & Company (DE) : Free Stock Analysis Report
 
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