Zacks Earnings Trends Highlights: Amazon, McDonald's, Walmart and Target

For Immediate ReleaseChicago, IL – May 29, 2024 – Zacks Director of Research Sheraz Mian says, "Total Q1 earnings for the 477 S&P 500 members that have reported results are up +11.4% from the same period last year on +4.4% higher revenues."Zacks Director of Research Sheraz Mian says, "Total Q1 earnings for the 477 S&P 500 members that have reported results are up +11.4% from the same period last year on +4.4% higher revenues."Analyzing the Current Earnings OutlookNote: The following is an excerpt from this week’s Earnings Trends report. You can access the full report that contains detailed historical actual and estimates for the current and following periods, please click here>>>Here are the key points:Total S&P 500 earnings for the June quarter are expected to be up +5.5% from the same period last year on +3.8% higher revenues, with a broader and greater pressure on estimates relative to other recent periods.Q2 earnings estimates for 15 of the 16 Zacks sectors are down since the quarter got underway, with Aerospace as the only sector whose estimates have moved higher. The Tech sector’s estimates are down since the start of the period, but they have notably stabilized in recent weeks.The Q1 reporting cycle is now effectively behind us, with results from less than two dozen S&P 500 members still awaited at this stage. The Q1 earnings cycle has ended for 9 of the 16 Zacks sectors.Total Q1 earnings for the 477 S&P 500 members that have reported results are up +11.4% from the same period last year on +4.4% higher revenues, with 74.2% beating EPS estimates and 62.9% beating revenue estimates.An Underwhelming Retail Sector Earnings PerformanceTotal Q1 earnings for the 28 of the 33 Retail sector companies in the S&P 500 index that have reported already are up +11.2% from the same period last year on +5.0% higher revenues, with 60.7% beating EPS estimates and 57.1% beating revenue estimates.Regular users of Zacks Research know that we have a stand-alone economic sector for the Retail sector, unlike the ‘official’ Standard & Poor’s classification that places retailers in the Consumer Discretionary and Consumer Staples sectors. The Zacks Retail sector includes online vendors like Amazon AMZN, restaurant operators like McDonald's MCD and conventional retailers like Walmart WMT and Target TGT.These Retail sector companies have been struggling to beat EPS and revenue estimates.The group’s +11.2% earnings growth drops to a decline of -5.0% once Amazon’s substantial contribution is excluded from the numbers.If we look at Retail sector earnings on an annual basis, the expectation is for +4.1% earnings growth this year, which follows +22.7% growth in 2024. But as we saw with the Q1 earnings results, all of that growth is coming from Amazon, with this year’s +4.1% earnings growth dropping to -0.6% and last year’s +22.7% dropping to +1.8% once Amazon’s contribution is excluded from the sector’s numbers.A significant part of the sector’s earnings challenge is a result of margin pressures, with the logistics associated with e-commerce sales forcing retailers to spend heavily on fulfillment and deliveries.Retail sector margins outside of Amazon have been on a downtrend since 2021, with this year’s margins expected to serve as a bottom and start recovering going forward.Evolving Expectations for 2024 Q2 and BeyondThe start of Q2 coincided with heightened tariff uncertainty following the punitive April 2nd tariff announcements. While the onset of the announced levies was eventually delayed for three months, the issue has understandably weighed heavily on estimates for the current and coming quarters.The expectation at present is for Q2 earnings for the S&P 500 index to increase by +5.5% from the same period last year on +3.8% higher revenues.While it is not unusual for estimates to be adjusted lower, the magnitude and breadth of Q2 estimate cuts are greater than we have seen in the comparable periods of other recent quarters.Since the start of the quarter, estimates have come down for 15 of the 16 Zacks sectors, with the biggest declines for the Transportation, Autos, Energy, Construction, and Basic Materials sectors. The only sector experiencing favorable revisions in this period is Aerospace.Estimates for the two largest earnings contributors to the index – Tech & Finance – have also declined since the quarter began.Tech sector earnings are expected to be up +11.9% in Q2 on +9.9% higher revenues. While these earnings growth expectations are materially below where they stood at the start of April, the revisions trend appears to have notably stabilized lately, as we have been flagging in recent weeks. You can see this in the sector’s revisions trend.Estimates for the Tech sector have stabilized and are no longer under the type of downward pressure that we were experiencing earlier. The Tech sector is much more than just any another sector, as it alone accounts for almost a third of all S&P 500 earnings.The Earnings Big PictureWhile estimates for this year have been under pressure lately, there haven’t been a lot of changes to estimates for the next two years at this stage.Stocks have recouped their tariff-centric losses, although the issue has only been deferred for now. While some of the more dire economic projections have eased lately, there is still plenty of macro uncertainty that will likely continue to weigh on earnings estimates in the days ahead, particularly as we gain visibility on the tariffs question.Why Haven't You Looked at Zacks' Top Stocks?Since 2000, our top stock-picking strategies have blown away the S&P's +7.7% average gain per year. Amazingly, they soared with average gains of +48.4%, +50.2% and +56.7% per year.Today you can access their live picks without cost or obligation.See Stocks Free >>Media ContactZacks Investment Research800-767-3771 ext. 9339support@zacks.comhttps://www.zacks.comZacks.com provides investment resources and informs you of these resources, which you may choose to use in making your own investment decisions. Zacks is providing information on this resource to you subject to the Zacks "Terms and Conditions of Service" disclaimer. www.zacks.com/disclaimer.Past performance is no guarantee of future results. Inherent in any investment is the potential for loss.This material is being provided for informational purposes only and nothing herein constitutes investment, legal, accounting or tax advice, or a recommendation to buy, sell or hold a security. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. It should not be assumed that any investments in securities, companies, sectors or markets identified and described were or will be profitable. All information is current as of the date of herein and is subject to change without notice. Any views or opinions expressed may not reflect those of the firm as a whole. Zacks Investment Research does not engage in investment banking, market making or asset management activities of any securities. These returns are from hypothetical portfolios consisting of stocks with Zacks Rank = 1 that were rebalanced monthly with zero transaction costs. These are not the returns of actual portfolios of stocks. The S&P 500 is an unmanaged index. Visit https://www.zacks.com/performance for information about the performance numbers displayed in this press release.Zacks' Research Chief Names "Stock Most Likely to Double"Our team of experts has just released the 5 stocks with the greatest probability of gaining +100% or more in the coming months. Of those 5, Director of Research Sheraz Mian highlights the one stock set to climb highest.This top pick is among the most innovative financial firms. With a fast-growing customer base (already 50+ million) and a diverse set of cutting edge solutions, this stock is poised for big gains. Of course, all our elite picks aren’t winners but this one could far surpass earlier Zacks’ Stocks Set to Double like Nano-X Imaging which shot up +129.6% in little more than 9 months.Free: See Our Top Stock And 4 Runners UpWant 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 Amazon.com, Inc. (AMZN): Free Stock Analysis Report Target Corporation (TGT): Free Stock Analysis Report Walmart Inc. (WMT): Free Stock Analysis Report McDonald's Corporation (MCD): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).Zacks Investment ResearchWeiter zum vollständigen Artikel bei Zacks Weiter zum vollständigen Artikel bei Zacks