for immediate posting
CHICAGO, Illinois – April 25, 2022 – Zacks.com has released a list of companies likely to release earnings surprises. This week’s list includes Netflix NFLX, Apple AAPL, Amazon AMZN, Alphabet GOOGL, and Meta Platforms FB.
Tech earnings preview after Netflix’s Fiasco fails
Netflix Still in the kennel after coming up with quarterly numbers put a question mark over its business model and expectations for the entire broadcast space.
The shameless shockwaves from the broadcasting giant put the spotlight on other tech leaders on board for reporting this week’s March quarter results. These include apple And Amazonthat appears after the market closes on Thursday (28/4); the alphabet Reports after market close on Tuesday (26/4); And ID pads Reports after market close on Wednesday (27/4).
Tech stocks were under the gun even before the Netflix explosion, as sentiment shifted toward the group with the upcoming change in Fed policy. Under this new monetary policy regime of reduced liquidity and higher interest rates, high-growth stocks such as those in the technology sector become less attractive. Or at least that is the perceived wisdom of the market and how these sectors are expected to behave.
In fairness, Netflix doesn’t have much in common with the likes of Amazon, Apple, or Alphabet. The first-mover advantage afforded her the opportunity to capture a large slice of the emerging streaming space, but she’s never quite enjoyed the kind of ditch around her Alphabet-owned Search or Amazon business in digital sales.
The tech sector is at the bottom of the pile – despite Netflix’s “doghouse” mode. This is a reflection of the sentiment issue above with these stocks in the Fed’s tightening cycle. Second, the technology sector and also these tech pioneers are led by the financial sector, directly benefiting from higher prices.
Revenue remains strong. It is cost pressures that affect earnings expectations. Needless to add, these tech leaders face squeezed margins.
Whether or not the growth trend of large tech companies slows down is a function of your horizon holdings. These companies are impressive long-term growth drivers.
In addition to the “Big Five” tech players, first-quarter total profit for the tech sector as a whole is expected to decline -0.3% from the same period last year on a +7.5% revenue increase.
This big picture of the Big Five, as well as the sector as a whole, shows a slowing growth trend. However, unlike this “quarterly view”, the annual profile shows greater stability.
Earning season scorecard for the first quarter of 2022
Total first-quarter earnings of the 100 S&P 500 members who reported results through Friday, April 22, were -2.1% from the same period last year on a +9.1% revenue increase, with 77% beating estimates of return on earnings. The stock and 72% beat revenue estimates.
We get to the heart of first-quarter earnings season next week, with more than 700 companies reporting their results, including 176 members of the Standard & Poor’s 500. This week’s list of reports provides a representative cross-section of all segments, as well as technology leaders.
As we’ve pointed out all along, companies find it hard to beat consensus estimates the way they did so easily in the recent past. In fact, the percentages for the first quarter are the lowest since the second quarter of 2020.
Looking at the first quarter as a whole, with the actual values of the 100 index members and estimates for upcoming companies, total earnings of +5.9% are expected over +10.6% higher revenue.
Excluding a 14% drop in the finance sector earnings, the index’s growth rate improves to +12.2%. On the other hand, the energy sector has a very strong earnings profile at the moment, as the sector is expected to generate 222.9% more profits compared to the same period last year, thanks to a 44.4% increase in revenue.
Excluding the huge contribution of the energy sector, earnings for the rest of the index will rise only +0.3% on +8.1% higher revenue.
For a detailed look at the overall earnings picture, including forecasts for upcoming periods, please check out our weekly Earnings Trends Report >>>> Positive Surprises at Covid Low Levels
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