This is the biggest week for earnings of the entire third quarter earnings season. Five of the Magnificent 7 stocks are reporting earnings including Alphabet Inc., Apple Inc., Microsoft Corp., Meta Platforms, Inc. and Amazon.com, Inc.
Of the other two Magnificent 7 stocks, Tesla reported better-than-expected earnings last week and NVIDIA Corp. will report earnings in late November.
How Good Are Their Earnings Surprise Records?
That means all eyes will be on the “Mag 5” this week. As a group, they have surprisingly good earnings surprise track records.
While none have perfect 5-year records, two of them have only missed once during that period. All of them have earnings streaks going into this report of at least 6 beats in a row.
Analysts are also bullish on some of the companies ahead of the report which says a lot. For example, 2 estimates have been revised higher for the quarter on Alphabet in the last week.
The analysts don’t like to get it wrong on earnings. They will only raise estimates ahead of a report if they are confident that the quarter is going to be better than originally expected.
Will these Magnificent 7 stocks be able to meet high expectations this week?
Here Come the Mag 5 Earnings Reports
1. Alphabet Inc. (GOOGL)
Alphabet has beat 6 quarters in a row. Analysts are bullish, raising earnings estimates going into this report.
Shares of Alphabet have lagged the S&P 500 this year. It’s up 20.1% versus the S&P 500 up 23%. But Alphabet is also the cheapest of the Magnificent 7 stocks. It trades at just 21.6x forward earnings.
Should Alphabet be on the short list for value investors?
2. Apple Inc. (AAPL)
Apple has beat 6 quarters in a row. It has only missed once in the last 5 years. That’s an impressive record with the pandemic in that period.
Shares of Apple are up 25.8% year-to-date, just beating the S&P 500 at 23%. It’s not cheap. Apple trades with a forward P/E of 31 and earnings are expected to be up just 8.5% this year.
Will Apple surprise again this quarter?
3. Microsoft Corp. (MSFT)
Microsoft has beat 8 quarters in a row. It also has only missed once in the last 5 years, in 2022.
Shares of Microsoft have lagged with a gain of just 15.5% year-to-date. It’s the poorest performer of these 5 stocks. It’s not cheap either. Microsoft trades with a forward P/E of 32.9.
Earnings are expected to rise 10.4% in the fiscal first quarter of 2025.
Is that earnings growth good enough or does Microsoft have to step up its game?
4. Meta Platforms, Inc. (META)
Meta Platforms has beat on earnings 7 quarters in a row. It has only missed 4 times in the last 5 years.
Shares of Meta Platforms are up 66.5% year-to-date making it the best performing stock of the Magnificent 7 stocks reporting this week. It’s been busting out to new all-time highs this year.
Meta Platforms is still attractively priced with a forward P/E of 26.7.
Should investors get into Meta Platforms here?
5. Amazon.com, Inc. (AMZN)
Amazon has beat 7 quarters in a row. For a company that historically hasn’t cared if it missed, or beat, it has put together a nice earnings surprise streak.
Shares of Amazon are up 26.3% year-to-date, just beating the S&P 500 up 23%. Amazon hit new all-time highs earlier this year but are looking for another breakout.
Amazon isn’t cheap on a P/E basis, but it never has been. It trades with a forward P/E of 39.6. However, Amazon is expected to grow its earnings by double digits this year and next.
Should Amazon be on your short list?
[In full disclosure, Tracey owns shares of GOOGL, MSFT and AMZN in her personal portfolio.]
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