For Immediate Release
Chicago, IL - March 20, 2017 - Zacks.com releases the list of companies likely to issue earnings surprises. This week's list includes FedEx (NYSE: FDX - Free Report ), Nike (NYSE: NKE - Free Report ), Accenture (NYSE: CAN - Free Report ), ConAgra (NYSE: CAG - Free Report ) and Micron Technology (NASDAQ: MU - Free Report ).
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Previewing Q1 Earnings Season
We are still a couple of weeks away from the end of the March quarter, but the Q1 earnings season has gotten underway already. The four S&P 500 members that have reported results like Oracle , Adobe Systems and others have come out with their February fiscal quarter results, which form part of our Q1 earnings tally. We have another 8 index members reporting results this week, including bellwethers like FedEx , Nike , Accenture and others.
The Oracle and Adobe reports have been very strong, with both companies showing plenty of momentum in their businesses, which likely helps frame earnings expectations for the Tech sector. This week's report from Accenture should shed further light on this key sector, the strongest stock price performer in the year-to-date period.
These early reports notwithstanding, the reporting cycle doesn't take the spotlight till about mid-April, as the chart below of reporting calendar for the S&P 500 index clearly shows.
This Week's Key Reports
FedEx (NYSE: FDX - Free Report ) - FedEx reports after the market's close on Tuesday, March 21st, with the company expected to earn $2.65 per share on $14.98 billion in revenues, up +5.7% and +18% from the year-earlier level, respectively. The company missed expectations in the last earnings report on December 20th, which has weighed on the stock since then. The stock is down -2% since the last earnings report, underperforming the Zacks Transportation sector (up +1.3%) and the S&P 500 (up +4.8%). While FedEx's surprise history has not been consistent, the stock always responds to the earnings report in a big way.
Nike (NYSE: NKE - Free Report ) - Nike reports the same day as FedEx after the market's close on Tuesday, March 21st. The company is expected to earn $0.52 per share on $8.45 billion in revenues, down -4.2% on +5.2% higher revenues from the year-earlier period, respectively. The stock responded positively to the last earnings report on December 20th, but has been a laggard over the past year (down -8.9%) relative to the Consumer Discretionary sector (up +13.8%) and the S&P 500 index (+16%). Competitive challenges from the likes of Under Armour and Adidas and the impact of problems in the retail chain on the company's inventory situation have been the key issues in the Nike story. We should keep in mind, however, that while the Nike stock has been a laggard over the past year, Under Armour has been an even been bigger laggard.
Accenture (NYSE: CAN - Free Report ) - Accenture, the tech consulting firm, reports results before the market's open on Thursday, March 23rd. The company is expected to earn $1.30 per share on $8.34 billion in revenues, down -3% on +5% higher revenues from the year-earlier period, respectively. The stock responds strongly to the earnings report - it was down in response to the last earnings report on December 21st but has done better than the S&P 500 index since the last earnings report. The key significance of the Accenture report is management's commentary about technology spending trend, which offers read-throughs for IBM (IBM) and broader Technology space.
ConAgra (NYSE: CAG - Free Report ) and Micron Technology (NASDAQ: MU - Free Report ) are some of the other notable reports this week.
Expectations for Q1
Total Q1 earnings are expected to be up +6.5% from the same period last year on +6.4% higher revenues. This would follow +7.3% earnings growth in 2016 Q4 on +4.7%, the highest growth pace in all most two years.
Estimates for Q1 came down as the quarter unfolded, with the current +6.5% growth down from +10.4% at the end of December.
Please note that while Q1 estimates have followed well traversed path that we have been seeing consistently over the last few years, the magnitude of negative revisions compares favorably to other periods, particularly in the first half of last year and all of 2015. In other words, Q1 estimates have come down, but they haven't come down by as much.
Please note that the Q1 earnings season would follow the strong showing on the earnings front in the preceding reporting cycle. Not only did 2016 Q4 growth reach the highest in two years, but total earnings for the quarter also reached a new quarterly record. The strong Q4 performance came after the first positive earnings growth in 2016 Q3, having declined in each of the preceding 5 quarters.
Expectations Beyond Q1
The chart below shows the Q1 earnings growth contrasted with what is expected in the following three quarters and actual results in the preceding 5 quarters.
Please note that the earnings backdrop has not changed in any meaningful way since the November elections, notwithstanding the market's strong gains since then. The only exception to this comment is the Finance sector whose earnings outlook has improved as a result of the uptrend in interest rates since November 8th. It is reasonable to expect that earnings estimates will move favorably once the new administration's growth-friendly policies get enacted. For now, however, estimates are following the long-established trend of coming down.
Note : Sheraz Mian regularly provides earnings analysis on Zacks.com and appears frequently in the print and electronic media. In addition to this Earnings Preview article, he publishes the Zacks Earnings Trends report every week.
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Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report FedEx Corporation (FDX): Free Stock Analysis Report Nike, Inc. (NKE): Free Stock Analysis Report ConAgra Foods Inc. (CAG): Free Stock Analysis Report Micron Technology, Inc. (MU): Free Stock Analysis Report To read this article on Zacks.com click here.