The flood of Q1 earnings announcements continues this week, with almost one thousand companies reporting results, including 159 S&P 500 members. By the end of this week, we will have seen Q1 results from 72% of the index’s total membership.
But with results from more than half of the index’s total market capitalization already out, we have a pretty good sense of how weak this earnings actually has been. We knew that growth will be difficult following the massive revisions to estimates in the run up to the start of the Q1 earnings season. But despite those sharp revisions to estimates ahead of this reporting cycle, companies are struggling to beat revenue estimates.
At this stage in the Q1 reporting cycle, the ratio of companies beating revenue estimates is the lowest that we have seen in the recent past. The headwinds aren’t new – the strong U.S. dollar, global growth issues and Energy sector weakness – we heard about all of them in the Q4 earnings season as well.
More on the aggregate earnings picture emerging from the already-released Q1 results a little later, but let’s briefly touch on the Tech sector’s results. A couple of standout performances aside, the Tech sector’s Q1 results have been fairly weak relative to what we have been seeing from the sector in other recent reporting periods. Growth rates are weak as is the case with other sectors except Finance, fewer companies are able to beat the sharply lowered estimates and expectations for the current period are coming down. Â
For more details on the Tech sector’s performance this earnings season, please click here.
Before we dig into the results already on the books, let’s pinpoint the key earnings reports coming out this week
- Monday – Apple (AAPL) is the key report today, expected to report $2.18 per share on $56.8 billion in revenues vs. $1.66 per share on $45.6 billion in revenues in the March 2104 quarter. Earnings ESP, or Expected Surprise Prediction, our proprietary leading indicator of positive earnings surprises, is showing Apple beating estimates on Monday. While the Tech sector’s Q1 earnings growth is currently in the negative territory, Apple’s estimated $12.6 billion in earnings on Monday will push the growth rate into positive territory.
- Tuesday –On a very busy day with more than 200 companies reporting results, including 40 S&P 500 members, the notable ones are Pfizer (PFE – Analyst Report), Merck (MRK – Analyst Report), Ford (F – Analyst Report) and UPS (UPS – Analyst Report), just to name a few.
- Wednesday – On another very busy day with more than 250 companies reporting results (including 43 S&P 500 members), the more notable reports include MasterCard (MA – Analyst Report), International Paper (IP – Analyst Report), and Eaton Corp. (ETN – Analyst Report). With positive Earnings ESP and Zacks Rank #3 (Hold), MasterCard and International Paper are highly likely to come out with positive surprises on Wednesday.
