The Q2 earnings season is gaining momentum with 189 companies on the S&P 500 index reporting this week. Although it is too early to predict any clear pattern, the 126 companies that have reported results through Friday (Jul 22), more or less confirm the grim earnings projections for the quarter. Based on the hitherto declared results, Q2 is widely expected to be the fifth consecutive quarter to report an earnings decline for the benchmark index.
Plagued by a plethora of macroeconomic issues and continued volatility in the equity market, Q2 earnings estimates for the S&P 500 index have hovered in the negative territory, improving slightly from the last quarter. Per the latest Earnings Trend Report , overall Q2 earnings for the S&P 500 companies are expected to be down 3.4% on a 0.5% decline in revenues. The relative improvement in negative estimate revisions for the quarter is largely due to a turnaround in oil prices and fading effects of the dollar strength. The S&P 500 has also witnessed a dramatic reversal in its fortunes when it shrugged off about 5.3% drop in just two trading sessions (on the Brexit referendum) to record over 2% return for the quarter.
However, the overall Q2 earnings scenario still remains clouded with uncertainty. What is more alarming is that the likely dismal earnings performance is not attributable to the inherent weakness of the Energy sector alone. Rather, downward estimate revisions are expected in almost all the sectors, barring a few. About 9 of the 16 sectors are expected to witness an earnings decline in the quarter under review, with Oil/Energy, Basic Materials, Transportation and Industrial Products being the most notable.
Among the Waste Removal stocks slated to report this week, let's have a sneak peek at three major industry players to see how things are gearing up for the upcoming quarterly results.
Republic Services Inc.RSG is scheduled to report second-quarter 2016 results after the closing bell on Jul 28. The company is focused on enhancing its operations by streamlining the cost structure, improving revenue quality and seeking growth through profitable investment opportunities. Republic Services is realigning its field support functions by combining two organizational layers into one and expects these initiatives to contribute approximately $25 million of annual cost savings from 2018. As part of the realignment program, the company centralized the management structure for recycling operations. The new organizational structure is likely to ensure a clear ownership for the recycling and processing market vertical. Republic Services is also transitioning to a fee-based recycling processing model to cover processing costs and generate a healthy ROI. For the impending quarter, this Zacks Rank #2 (Buy) stock has an Earnings ESP of 0.00%, making an earnings prediction uncertain. (Read more: What's in Store for Republic Services in Q2 Earnings? )
REPUBLIC SVCS Price and EPS Surprise
Stericycle Inc.SRCL is scheduled to report second-quarter 2016 results after the closing bell on Jul 28. Stericycle is continuously on the lookout for strategic acquisitions that will expand its market share and geographic base. The acquisition pool of the company remains robust in multiple geographies and lines of businesses. The acquisition of information destruction services provider Shred-it International has enhanced Stericycle's core compliance solutions portfolio. The acquired unit has begun to offer specialized services, thereby augmenting its value proposition to clients. For the impending quarter, this Zacks Rank #3 (Hold) stock has an Earnings ESP of -1.70%, making an earnings prediction uncertain. (Read more: Will Stericycle Disappoint this Earnings Season? )
STERICYCLE INC Price and EPS Surprise
US Ecology, Inc.ECOL is slated to report second-quarter 2016 results after the closing bell on Jul 28. US Ecology is streamlining its business for better long-term growth opportunities. In order to focus more on its core business activities, the company has decided to divest its non-core assets. During the quarter, the company announced the strategic sale of its non-hazardous solid and liquid waste processing unit, USE Augusta, located in Augusta, GA, to Covanta Environmental Solutions. For the impending quarter, this Zacks Rank #4 (Sell) stock has an Earnings ESP of 0.00%, making surprise prediction uncertain.
US ECOLOGY INC Price and EPS Surprise
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 >>
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