First Leg of Earnings Season Going Better Than Expected

Zacks Equity Research

Updated Fri, 21 Oct 2022, 11:04 am3-min read

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With the “first leg” of Q3 earnings season in the books, results have been generally better than expected. This is off bleak expectations, however — many analysts were expecting dire misses and guidance that hasn’t materialized (aside from companies like Snap SNAP which reported yesterday and looks to open down almost another -30%).

That said, keep in mind the early part of earnings season includes some of Wall Street’s biggest banks and the largest U.S.-based airlines — both of whom have benefited from current economic conditions: the big banks from higher interest rates and airlines from spiked airfare prices (and giant year-over-year comps). Beyond these segments of the overall economy, we begin to look at some of the more troubled industries, like Big Tech.

Next week alone brings us earnings releases from Microsoft MSFT, Alphabet GOOGL, Apple AAPL and Amazon AMZN — all of whom are down -20% to -32% year to date. It’s likely too late to salvage any gains for calendar 2022 for any of these “FAANG” stocks, and it remains to be seen if Q3 will provide the remedy for corporate profits going forward — or if there will be something to look forward to in their guidance. In any case, these stocks are still very widely owned, and their earnings reports will be rightly followed very closely.

American Express AXP reported Q3 earnings ahead of Friday’s open, posting mild beats on both top and bottom lines above Zacks consensus: earnings of $2.47 per share outpaced expectations by 5 cents on revenues of $13.56 billion, ahead of the estimated $13.51 billion. Full-year guidance remained relatively in-line with former projections, as its Chairman and CEO said “Demand for travel is exceeding expectations.” However, $800 million in loan loss provisions caught investors off guard, and shares are down -4.5% in early trading.

Verizon VZ is also down more than -4% this morning on earnings and sales beats in its Q3 print: earnings of $1.32 per share surpassed the Zacks consensus by 4 cents (though still down from $1.41 per share a year ago), on +4% gains in revenues to $34.2 billion in the quarter. But a -23% drop in net income to $5 billion and a loss of -189K subscribers put a damper on this morning’s earnings report.

The Hague, Netherlands-based oilfield services major Schlumberger SLB put up solid outperformance on both top and bottom lines this morning, with earnings of 63 cents per share easily taking out the 55-cent estimate on $7.48 billion in quarterly sales surging past the $7.14 billion expected. This marks the fourth-straight positive earnings surprise for the Zacks Rank #2 (Buy)-rated company, which trades +2.2% higher in today’s pre-market.

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First Leg of Earnings Season Going Better Than Expected