For Immediate Release
Chicago, IL – February 8, 2021 – Zacks.com releases the list of companies likely to issue earnings surprises. This week’s list includes The Walt Disney Company
DIS
, The Coca-Cola Company
KO
, Uber Technologies, Inc.
UBER
, Twitter, Inc.
TWTR
and The Boeing Company
BA
.
Q4 Earnings Growth Turns Positive
Earnings growth was expected to resume in the first quarter of 2021 after the pandemic-driven declines of 2020. But positive growth has arrived a little earlier, with earnings in the ongoing Q4 earnings season now modestly above the year-earlier period.
To give you a sense of how much the Q4 growth pace has changed in recent weeks and how good the reporting cycle has been, keep in mind that as recently as mid-December 2020, the consensus estimate was for a decline of -11.2%.
Earnings Season Scorecard (
as of Friday, February 5
th
)
The Q4 earnings season has now crossed the half-way mark, with results from 292 S&P 500 members or 58.4% of the index’s total membership out already. Please note that these 292 index members collectively account for 75.6% of the index’s total market capitalization. As such, the results out already represent a true cross section of the index as a whole and of the overall earnings picture.
We have another busy reporting line-up this week, with more than 450 companies on deck to report Q4 results, including 82 S&P 500 members. This week’s reporters range from legacy blue chips like Disney, Coke and others to up-and-coming bellwethers like Uber, Twitter and others.
Total Q4 earnings (or aggregate net income) for these 292 companies are up +4.9% from the same period last year on+2.4% higher revenues, with 80.5% beating EPS estimates and 79.5% beating revenue estimates.
Not only are a historically high proportion of the reporting companies beating consensus EPS and revenue estimates, but they are also providing positive and reassuring guidance that is helping sustain the positive revisions trend that has been in place since July 2020.
We expect this favorable trend to strengthen and accelerate as we move into the second half of the Q4 earnings season this week, with more than 450 companies on deck to report results, including 82 S&P members.
A number of sectors standout in coming out with impressive results, with Technology and Finance particularly notable. Results from the Construction and Basic Materials sectors are also very strong.
For the Technology sector, we now have Q4 results from 83.7% of the sector’s total market cap in the index. Total earnings for these Tech companies are up +22.3% from the same period last year on +14.2% higher revenues, with 90.7% beating EPS estimates and 86% beating revenue estimates.
The Overall Earnings Picture
Looking at Q4 as a whole, combining the actual results from 292 index members with estimates for the still-to-come companies, total earnings are now expected to up +2.2% on +2.5% higher revenues. This positive growth follows three-straight quarters of declines for S&P 500 earnings.
Sectors with the weakest growth remain the same ones that struggled in the first three quarters of the year, including Transportation (-91.7% earnings decline), Energy (-94.1%), and Consumer Discretionary (-72.5%). Q4 earnings for the Aerospace sector now are expected to be down -138.4%, largely reflecting Boeing’s weak quarterly release.
On the positive side, Q4 earnings are expected to be up +142.9% at Autos, +38.3% at Construction, +22.1% at Basic Materials, +17.6% at Finance, +19.6% at Technology, +13.9% at Medical and +10.4% at the Retail sector.
Excluding Finance’s help, Q4 earnings for the rest of the S&P 500 index would be down -1.8%, instead of +2.2%. Q4 Earnings decline -4.6% rate, instead of up +2.2% once Technology’s strong showing is excluded.
Growth is expected to resume this year, with full-year 2021 earnings for the S&P 500 index currently expected to be up +27% relative to 2020 estimates.
Estimates for 2021 have been steadily going up over the last six months. But we strongly feel that there is significant room for further positive revisions as the overall macro backdrop stabilizes and gets clearer, particularly in the second half of the year.
For an in-depth look at the overall earnings picture and expectations for the coming quarters, please check out our weekly Earnings Trends report
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