The earnings season has kick started with about 54 S&P 500 companies having reported their results till Jul 19. Total earnings for these 54 companies (accounting for 16.9% of the index's total market capitalization) are up 11.9% year over year on 5.5% higher revenues, with 79.6% beating earnings estimates and 72.2% surpassing top-line expectations. Based on the hitherto observed pattern, the second quarter is anticipated to register high single-digit percentage growth on a year-over-year basis.
Per the latest Earnings Trends , overall second-quarter earnings for all the S&P 500 companies are expected to be up 7.2% on 4.5% growth in revenues. Although it represents a slightly tempered growth projection compared with the double-digit growth rate of the first quarter, the dollar amount of the total earnings is likely to be on par or even better than the all-time high achieved in fourth-quarter 2016. The relative improvement in the quarterly performance is largely due to a turnaround in the economy, improved job market scenario and rising oil prices . Experts widely believe that earnings growth is likely to be in double digits in 2018 and beyond.
For the second quarter as a whole, about six of the 16 Zacks sectors are expected to witness an earnings decline, with Autos, Conglomerates and Utilities being the biggest drag.
The Conglomerates sector appears to be a major decliner. For the sector, earnings are expected to decline 24.9% year over year while sales are touted to fall 7.1% due to a likely disappointing performance by one of the leading players in the industry.
Let's have a sneak peek at two major Conglomerates scheduled to report second-quarter 2017 earnings tomorrow to see how things are shaping up for the upcoming results.
General Electric CompanyGE is scheduled to report results before the opening bell. With a reshuffle in its top management, General Electric is aiming to focus on its core industrial operations after completing the GE Capital exit plan. Despite prudent steps to limit its financial exposure by divesting GE Capital assets, General Electric is still susceptible to various market risks. The company's objectives of simplification and productivity improvement pose operational execution risks as well. For a company as big as General Electric, the additional revenues needed for growth are quite large, posing a challenge to developing businesses on such a vast scale. (Read more: GE to Report Q2 Earnings: Will it Pull Off a Surprise? )
In the second quarter, the company's earnings are expected to fall 51% year over year on 13% lower revenues. For the impending quarter, the company has an Earnings ESP of 0.00%, and Zacks Rank #4 (Sell), making an earnings surprise prediction uncertain. A stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) for a likely earnings beat. You can see the complete list of today's Zacks #1 Rank stocks here .
General Electric Company Price and EPS Surprise
You can uncover the best stocks to buy or sell before they're reported with our Earnings ESP Filter .
Honeywell International Inc.HON is slated to report results before the opening bell. During the quarter, the company inked a definitive agreement to acquire Nextnine, a privately held security management solutions provider for industrial cyber security, for an undisclosed amount. The transaction is likely to augment Honeywell's cyber security portfolio with complementary products and services. Nextnine's comprehensive portfolio will also be utilized in Honeywell Connected Plant that facilitates connected plant operations to improve plant availability, safety and reliability quotients. This is likely to generate incremental revenues for the company and boost its bottom-line growth. We remain inconclusive on earnings beat prediction this quarter as it has an ESP of 0.00% and a Zacks Rank #2. (Read More: What's in Store for Honeywell this Earnings Season? )
Honeywell International Inc. Price and EPS Surprise
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