Monday, February 13 2017
The Zacks Research Daily features the best research output of our analyst team. In today's write-up, we are featuring analyst reports on 16 major stocks, including reports on Boeing (BA), Pfizer (PFE) and Goldman Sachs (GS). These reports have been hand-picked from amongst the 70 or so stock research reports published by our analyst team today. You can see all of today's research reports here >>
In addition to these stock research reports, we are also giving you a real-time scorecard of the ongoing Q4 earnings season. You can read more about our views about this earnings season in the weekly Earnings Preview report >>>Plenty of Positive Earnings News
Q4 Earnings Scorecard(as ofMonday, February13th)
Including all of this morning's releases, we now have Q4 results from 359 S&P 500 members, or 71.8% of the index's total membership. Total earnings for the 359 index members that have reported results already are up +6.4% on +4.6% higher revenues, with 69.1% beating EPS estimates and 54.6% beating revenue estimates.
This is better earnings and revenue growth performance than we have seen from this group of 359 S&P 500 members in other recent periods, even after adjusting for the strong growth from the Finance sector (earnings growth would be +4.5% excluding thee Finance sector on +4.5% higher revenues).
The proportion of companies beating EPS and revenue estimates, however, is tracking below other recent periods. Only 40.9% of the index members are able to beat both EPS and revenue estimates, which compares to 47.9% in the preceding quarter for the same sample of 359 S&P 500 members (the 4-quarter average is 45.7% & the 12-quarter average is 45.3%).
Looking at Q4 as a whole, combining the actual results from the 359 index members with estimates from the still-to-come 141 companies, total earnings are expected to be up +7.5% from the same period last year on +3.9% higher revenues. This is the best earnings and revenue growth pace in two years. Importantly, the strong Q4 growth is not a function of easy comparisons, but rather a result of actual gains. The fact is total earnings for the S&P 500 index are on track to reach an all-time quarterly record, surpassing the level achieved in 2014 Q4.
Estimates for the current period (2017 Q1) are holding up fairly well; they are coming down, but not at the pace as would typically expected. Total earnings for the index are currently expected to be up +7.9% in Q1, which is down from +10.3% on January 4th.
Today's Featured Research Reports
Boeing shares have surged +53.2% over the past one-year, outperforming the Zacks Aerospace & Defense sector, which gained +34.1% during the same time period. Boeing's four-quarter report was mixed - with earnings beating expectations and revenues falling short - but backlog was up from the year-earlier level. The analyst stresses that rising demand for its commercial airplanes on the back of steady improvement in passenger and freight traffic as the major factor behind the surge in Boeing shares. However, challenges including uncertain fate of high-cost programs, risks related to key project executions, order cancellations as well as stiff competition might have a negative impact on the company. (You can read the full research report onBoeinghere >>> )
Pfizer shares have done better than the large-cap peer group over the past year (the stock is up +10.2% over the last one year vs. +6.1% gain for the Zacks Large-Cap Pharma industry), but they have underperformed the S&P 500 index (up +23.3% over the past year) on continued drug pricing uncertainty that has gone away even after the election. These macro headwinds notwithstanding, the analyst is pointing out that Pfizer is strengthening its product portfolio as well as pipeline through acquisitions and licensing deals. A case in point is the Sep 2016 acquisition of Medivation that has strengthened Pfizer's cancer franchise. Meanwhile, new products like Ibrance should do well and drive revenues. (You can read the full research report on Pfizer here >>> )
Goldman Sachs shares performed impressively over the past three months on the back strong Finance sector rally following the November election. Factors including favorable economic growth forecasts, first rate hike over the past one year period and expectation of faster rate of increase in rates this year benefitted the company. The company's fourth-quarter results outpaced expectations on high fixed-income revenues and lower expenses. Since the election result day (Nov 8), shares of Goldman Sachs surged +33.4%, compared to 28.9% gain for Investment Bank industry during the same time frame. Well-diversified business and its focus to capitalize on growth opportunities will continue to boost the stock. Hence, the analyst believes that this Strong Buy-rated stock still has some rooms to surge further despite the strong rally. (You can read the full research report on Goldman Sachs here >>> )
Other noteworthy reports we are featuring today include U.S. Bancorp (USB), NVIDIA (NVDA) and Twitter ( TWTR ).
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Director of Research
Note: Sheraz Mian heads the Zacks Equity Research department and is a well-regarded expert of aggregate earnings. He is frequently quoted in the print and electronic media and publishes the weekly Earnings Trends and Earnings Preview reports. If you want an email notification each time Sheraz publishes a new article, please click here >>>
Today's Must Read
The Zacks analyst thinks MasterCard kept its revenue momentum alive in Q4 driven by growth in cross-border volumes & switched transactions.
The Zacks analyst thinks U.S. Bancorp continues to gain from rising loans and deposits aiding revenue growth.
The Zacks analyst thinks growth in operating income and transformative redevelopments aided Simon Property's better-than-expected results.
The covering analyst thinks that NVIDIA's sustained focus on the development of innovative products for the gaming, datacenter and automobile sectors is driving both its top and bottom line.
The covering analyst thinks Time Warner's initiatives of foraying into new markets and digital endeavors have helped retain its surprise trend.
The Zacks analyst thinks BlackRock is well positioned to drive revenues up on the back of steady rise in AUM and opportunistic deals.
The covering analyst thinks Prologis' Q4 earnings and better-than-expected revenue numbers reflect decent demand for industrial real estates.
According to the Zacks analyst, the senior and junior notes offering will help the company in reducing its borrowings that will strengthen balance sheet and liquidity position.
Suncor's sustained cost cuts and strong operational performance has made the covering analyst turn bullish on Canada's biggest energy company.
According to the Zacks analyst, rapid store expansion will boost the results of the company. The company will also gain from its aggressive share repurchase policy.
The Zacks analyst thinks Twitter remains in trouble with slowdown in user and revenue growth. Live and user friendly changes could do the trick for Twitter but are proving to be time consuming.
Dismal Q1 results compelled management to trim view. Whole Foods' top line lagged the estimate for the second straight quarter, while bottom line declined for the third quarter in row
Although Gilead's fourth quarter results beat estimates, the outlook was disappointing. Per the Zacks analyst, 2017 will be challenging for Gilead given the consistent decline in HCV franchise sales.