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Yahoo
a day ago
- Business
- Yahoo
What Can Investors Expect from Q2 Earnings?
The expectation is for Q2 earnings to increase by +5% from the same period last year on +3.9% higher revenues. This will be a material deceleration from the growth trend of recent quarters. In the unlikely event that actual Q2 earnings growth for the S&P 500 index turns out to be +5% as currently expected, this will be the lowest earnings growth pace for the index since the +4.3% growth rate in 2023 Q3. We have been regularly flagging in recent weeks that 2025 Q2 earnings estimates have been steadily coming down, as you can see in the chart below. Image Source: Zacks Investment Research The magnitude of cuts to 2025 Q2 estimates since the start of the period is larger and more widespread than what we have become accustomed to seeing in the post-COVID period. Since the start of April, Q2 estimates have declined for 14 of the 16 Zacks sectors (Aerospace and Utilities are the only sectors whose estimates have gone up), with the biggest cuts to Conglomerates, Autos, Transportation, Energy, Basic Materials, and Construction sectors. Estimates for the Tech and Finance sectors, the largest earnings contributors to the S&P 500 index, accounting for more than 50% of all index earnings, have also been cut since the quarter got underway. But as we have been pointing out recently, the revisions trend for the Tech sector has notably stabilized in recent weeks, as shown in the chart below. Image Source: Zacks Investment Research We see this same trend at play in annual estimates as well. The chart below shows the Tech sector's evolving earnings expectations for full-year 2025. Image Source: Zacks Investment Research A likely explanation for this stabilization in the revisions trend is the easing in the tariff uncertainty after the more punitive version of the tariff regime was delayed. Analysts started revising their estimates lower in the immediate aftermath of the early April tariff announcements, but appear to have since concluded that those punitive tariff levels are unlikely to get levied, helping stabilize the revisions trend. The chart below shows current Q2 earnings and revenue growth expectations in the context of the preceding four quarters and the coming three quarters. Image Source: Zacks Investment Research The chart below shows the overall earnings picture on a calendar-year basis. Image Source: Zacks Investment Research In terms of S&P 500 index 'EPS', these growth rates approximate to $253.84 for 2025 and $286.87 for 2026. The chart below shows how these calendar year 2025 earnings growth expectations have evolved since the start of Q2. As you can see below, estimates fell sharply at the start of the quarter, which coincided with the tariff announcements, but have notably stabilized over the last four to six weeks. Image Source: Zacks Investment Research The June-quarter reporting cycle will really get going when the big banks come out with their results on July 15th. But we will have officially counted almost two dozen quarterly reports from S&P 500 members by then. All of those reports will be from companies with fiscal quarters ending in May, which we and other research organizations count as part of the June-quarter tally. We have seen such fiscal May-quarter results from 9 S&P 500 members already and are on track to see another 8 index members come out with results this week. The notable companies reporting this week include FedEx FDX, Nike NKE, Micron MU, and others. FedEx shares were down big in response to the March 20th quarterly release when it missed estimates. But the stock has been struggling for the last couple of years, with the onset of uncertainty around international trade adding to muted demand trends in the industrial sector. FedEx has been actively working to reduce its cost base and lower the business's capital intensity. The board's announcement to spin off the LTL business (less-than-truckload business) is part of that repositioning. FedEx is scheduled to report after the market's close on Tuesday, June 24th. The company is expected to earn $5.94 per share on $21.7 billion in revenues, representing year-over-year changes of +9.8% and -1.9%, respectively. Estimates for the period have steadily come down, with the current $5.94 per share estimate down from $5.98 a month back and $6.32 three months ago. FedEx shares have lost roughly a fifth of their value this year, roughly in line with UPS's performance, but materially below the S&P 500 index's +1.2% gain. The stock is down -2.1% over the last three years, while the S&P 500 index has gained +60.3%. Just like FedEx, Nike is another bellwether that has been struggling lately, with the stock down -21.1% this year when the market as a whole is up +1.2%. Expectations for Nike's quarterly release after the market's close on Thursday, June 26th, remain low, with EPS and revenues expected to decline -89.1% and -15.4% from the same period last year, respectively The headwinds facing Nike include perceptions of a stale product line that has been weighing on demand and the resulting inventory build that needs to be rightsized. The inventory overhang is expected to persist for a few more quarters, but the market will eagerly seek incremental information on the reception of new products and updates on the product pipeline. The margin squeeze is primarily a result of clearing stale inventory, but also reflects the new management team's renewed focus on the wholesale business, which had been neglected in recent years. Micron Technology shares have literally been on fire lately, up +46.2% in the year-to-date period, handily outperforming the Zacks Tech sector's +1.5% gain and the S&P 500 index's +1.2% gain. Driving the stock's impressive momentum is Micron's leadership position in the high-bandwidth memory (HBM) space, a mission-critical input for high-performance computing (HPC) and artificial intelligence (AI) applications. The combination of stable demand trends in legacy products like DRAM and continued strength in HBM is expected to result in strong numbers when Micron reports results after the market's close on Wednesday, June 25th. The expectation is that Micron will report $1.57 per share in earnings on $8.81 billion in revenues, representing year-over-year changes of +153.2% and +29.3%, respectively. Estimates for the fiscal May quarter have remained unchanged over the last three months, although they have increased modestly for the August period and for next year as well. As noted earlier, we have already seen fiscal May-quarter results from 9 S&P 500 members, which we count as part of our Q2 tally. Total earnings for these 9 index members that have reported results are up +2.4% from the same period last year on +7.9% revenue gains, with 77.8% of the companies beating EPS estimates and all of them beating revenue estimates. The comparison charts below put the Q2 earnings and revenue growth rates for these index members in a historical context. Image Source: Zacks Investment Research The comparison charts below put the Q2 EPS and revenue beats percentages in a historical context. Image Source: Zacks Investment Research We are not drawing any conclusions from these results, given the small sample size at this stage. But we nevertheless wanted to put these early results in a historical context. For a detailed view of the evolving earnings picture, please check out our weekly Earnings Trends report here >>>> Earnings Estimates Stabilize: A Closer Look 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 NIKE, Inc. (NKE) : Free Stock Analysis Report Micron Technology, Inc. (MU) : Free Stock Analysis Report FedEx Corporation (FDX) : Free Stock Analysis Report This article originally published on Zacks Investment Research ( Zacks Investment Research
Yahoo
7 days ago
- Business
- Yahoo
Has AI started replacing junior software developers?
-- In a note this week, Barclays analysts told investors that, using job posting data, it has investigated whether the introduction of AI has begun to impact junior software developer roles. Their analysis, spanning the S&P 500, the broader Tech sector, and the Magnificent Seven companies (excluding Amazon (NASDAQ:AMZN)), reveals diverging trends. Barclays defines a "Jr. Software Developer (Jr. SDE) role as the one requiring less than three years of experience and a job title that includes the string 'software develop.'" The bank calculated the ratio of junior SDE roles to total job postings monthly, stating that "the ratio of Jr. SDE roles to total job postings has declined in the S&P 500 and Tech sector since 2022," while it "peaked in early 2025 for the Magnificent Seven companies (excluding Amazon)." To assess the impact of AI, Barclays conducted a regression analysis, correlating the junior SDE-to-total job posting ratio with the "number of months since ChatGPT's release." For the S&P 500, they "observe a significant negative relationship between the number of months since ChatGPT's release and the ratio of Jr. SDE roles to total job postings." The bank says this trend is also present in the broader tech sector, though not statistically significant. In contrast, "the Magnificent Seven companies show a significant positive relationship – suggesting that as time since ChatGPT increases, so does the share of Jr. SDE roles in their job postings." Barclays notes that "Several factors could explain these differences," such as job postings not perfectly reflecting hiring activity, or large tech firms, as primary AI developers, "most actively reshaping junior developer roles." Related articles Has AI started replacing junior software developers? 2025 Global Technology Conference: What did we learn? Rare earth supply risks: Is Tesla the real target by China? Error while retrieving data Sign in to access your portfolio Error while retrieving data Error while retrieving data Error while retrieving data Error while retrieving data
Globe and Mail
14-06-2025
- Business
- Globe and Mail
Previewing Q2 Earnings Expectations
The expectation is for Q2 earnings to increase by +5.1% from the same period last year on +3.8% higher revenues. This will be a material deceleration from the +11.9% earnings growth in Q1 on +3.6% revenue growth. In the unlikely event that actual Q2 earnings growth for the S&P 500 index turns out to be +5.1%, as currently expected, this will be the lowest earnings growth pace for the index since the +4.3% growth rate in 2023 Q3. We have been regularly flagging in recent weeks that 2025 Q2 earnings estimates have been steadily decreasing, as shown in the chart below. The magnitude of cuts to 2025 Q2 estimates since the start of the period is larger and more widespread compared to what we have become accustomed to seeing in the post-COVID period. Since the start of April, Q2 estimates have declined for 14 of the 16 Zacks sectors (Aerospace and Utilities are the only sectors whose estimates have increased), with the largest cuts to Conglomerates, Autos, Transportation, Energy, Basic Materials, and Construction sectors. Estimates for the Tech and Finance sectors, the largest earnings contributors to the S&P 500 index, accounting for more than 50% of all index earnings, have also been cut since the quarter got underway. But as we have been pointing out in recent weeks, the revisions trend for the Tech sector has notably stabilized in recent weeks, which you can see in the chart below. We see this same trend at play in annual estimates as well. The chart below shows the Tech sector's evolving earnings expectations for full-year 2025 A likely explanation for this stabilization in the revisions trend is the easing of tariff uncertainty after the more punitive version of the tariff regime was delayed. Analysts started revising their estimates lower in the immediate aftermath of the early April tariff announcements, but appear to have since concluded that those punitive tariff levels are unlikely to get levied, helping stabilize the revisions trend. The chart below shows current Q2 earnings and revenue growth expectations in the context of the preceding four quarters and the coming three quarters. The chart below shows the overall earnings picture on a calendar-year basis. In terms of S&P 500 index 'EPS', these growth rates approximate to $254.04 for 2025 and $287 for 2026. The chart below shows how these calendar year 2025 earnings growth expectations have evolved since the start of Q2. As you can see below, estimates fell sharply at the beginning of the quarter, which coincided with the tariff announcements, but have notably stabilized over the last four to six weeks. Key Earnings Reports This week The Q2 earnings season will really get going when the big banks come out with their June-quarter results in about a month. But we will have officially counted almost two dozen quarterly reports from S&P 500 members by then. All of those reports will be from companies with fiscal quarters ending in May, which we and other research organizations count as part of the June-quarter tally. We have seen such fiscal May-quarter results from four S&P 500 members, including last Wednesday's strong release from Oracle ORCL. We have another six S&P 500 members scheduled to report results this week, including Accenture ACN, Lennar LEN, and others. Oracle shares were up significantly following the beat-and-raise quarterly release, which came after two consecutive quarterly reports that market participants had found disappointing. Oracle's cloud growth appears to have finally arrived, with fiscal 2026 cloud revenues expected to grow by +40%, up from the fiscal 2025 growth rate of +24% (Oracle's fiscal year ends in May). As noted earlier, the stock has spiked on the earnings release and is now up +29.3% this year, handily outperforming the S&P 500 index (up +2.1%) and the Zacks Tech sector (up +2.5%). Shares of IT consulting firm Accenture have been under pressure lately, reflecting a challenging operating environment for its end-markets. The stock is down -11.4% this year, which compares to a +2.1% gain for the S&P 500 index and a +2.5% gain for the Zacks Tech sector. The issues in the Accenture story, in a generalized qualitative sense, pertain to the negative effects on corporate IT budgets of the ongoing tariff uncertainty and the deflationary effects of AI-driven operating efficiencies. One could argue that Accenture's scale lends its results considerable stability, particularly in comparison to other peers like India-based Infosys, TCS, and Wipro. But these macro headwinds nevertheless limit the stock's near-term upside potential. The company is scheduled to report results on June 20 th, with estimates essentially unchanged over the last two months. Lennar, the homebuilder, is scheduled to report results after the market's close on Monday, June 16 th. The homebuilder is expected to bring in $1.97 per share in earnings on $8.24 billion in revenues, representing year-over-year changes of -41.7% and -5.97%, respectively. This is a challenging environment for Lennar and other homebuilders, with demand hindered by affordability concerns and elevated mortgage rates. The stock was down after each of the last five quarterly releases and has lost roughly a fifth of its value this year (down -20.3%), which compares to the Zacks Construction sector's -1.9% decline and the S&P 500 index's +2.2% gain. Q2 Earnings Season Scorecard As noted earlier, we have already seen fiscal May-quarter results from four S&P 500 members, which we include in our Q2 tally. Total earnings for these four index members that have reported results are up +4.7% from the same period last year on +8.6% revenue gains, with 75% of the companies beating EPS estimates and all beating revenue estimates. The comparison charts below put the Q2 earnings and revenue growth rates for these index members in a historical context. The comparison charts below put the Q2 EPS and revenue beats percentages in a historical context. We are not drawing any conclusions from these results, given the small sample size at this stage. But we nevertheless wanted to put these early results in a historical context. 7 Best Stocks for the Next 30 Days Just released: Experts distill 7 elite stocks from the current list of 220 Zacks Rank #1 Strong Buys. They deem these tickers "Most Likely for Early Price Pops." Since 1988, the full list has beaten the market more than 2X over with an average gain of +23.5% per year. So be sure to give these hand picked 7 your immediate attention. See them now >> 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 Accenture PLC (ACN): Free Stock Analysis Report Oracle Corporation (ORCL): Free Stock Analysis Report Lennar Corporation (LEN): Free Stock Analysis Report This article originally published on Zacks Investment Research (
Globe and Mail
12-06-2025
- Business
- Globe and Mail
Earnings Estimates Stabilize: A Closer Look
Note: 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 +5.2% from the same period last year on +3.8% higher revenues, with a broader and greater pressure on estimates relative to other recent periods since the June-quarter got underway. Q2 earnings estimates for 14 of the 16 Zacks sectors have come down since the quarter got underway, with Aerospace and Utilities as the only sectors whose estimates have moved higher. Q2 earnings estimates for the Tech and Finance sectors, the two largest contributors to aggregate S&P 500 earnings, accounting for 51% of all index earnings, have also been cut since the quarter got underway. The quarter started with significant pressure on Tech sector estimates, but the negative revisions trend notably stabilized in the subsequent weeks. Q2 earnings for the 'Magnificent 7' group of companies are expected to be up +11.8% from the same period last year on +11.2% higher revenues. Excluding the 'Mag 7' contribution, Q2 earnings for the rest of the index would be up +3.4% (vs. +5.2%). The Q2 earnings season will really get going once JPMorgan and Wells Fargo kick-off the June-quarter reporting cycle for the Finance sector. But officially, the Q2 earnings season will have gotten underway much before that, as we and others count results from companies with fiscal quarters ending in May as part of the Q2 earnings season. Using that definition of Q2, we have already seen such results from Costco ( COST ), AutoZone ( AZO ), and Oracle ( ORCL ), and will have seen almost two dozen such results by the time the big banks report their results. Making Sense of Earnings Expectations for 2024 Q2 and Beyond The start of Q2 coincided with heightened tariff uncertainty following the punitive April 2 nd 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, particularly in the first few weeks after the April 2 nd announcement. The expectation at present is for Q2 earnings for the S&P 500 index to increase by +5.2% from the same period last year on +3.8% higher revenues. The chart below shows how Q2 earnings growth expectations have evolved since the start of the year. 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 14 of the 16 Zacks sectors, with the biggest declines for the Transportation, Autos, Energy, Construction, and Basic Materials sectors. The only sectors experiencing favorable revisions in this period are Aerospace and Utilities. 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 +12% in Q2 on +10.5% 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 in the chart below. This stabilizing turn in the Tech sector's revisions trend can be seen in expectations for full-year 2025 as well, as the chart below shows. The two charts above show that estimates for the Tech sector have stabilized and are no longer under the type of downward pressure experienced earlier in the quarter. 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 Picture The chart below shows expectations for 2025 Q2 in terms of what was achieved in the preceding four periods and what is currently expected for the next three quarters. The chart below shows the overall earnings picture for the S&P 500 index on an annual basis. While 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. 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 a little-known satellite-based communications firm. Space is projected to become a trillion dollar industry, and this company's customer base is growing fast. Analysts have forecasted a major revenue breakout in 2025. Of course, all our elite picks aren't winners but this one could far surpass earlier Zacks' Stocks Set to Double like Hims & Hers Health, which shot up +209%. Free: See Our Top Stock And 4 Runners Up Oracle Corporation (ORCL): Free Stock Analysis Report AutoZone, Inc. (AZO): Free Stock Analysis Report
Globe and Mail
15-05-2025
- Business
- Globe and Mail
Making Sense of the Evolving Earnings Picture
Note: 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 Q1 earnings for the 456 S&P 500 members that have reported results are up +12.1% from the same period last year on +4.5% higher revenues, with 73.9% beating EPS estimates and 62.1% beating revenue estimates. We continue to believe that this earnings season was less about what companies earned in the first quarter of 2025 and more about sizing up the earnings impact of the evolving macroeconomic and public policy backdrop. To that end, management commentary has largely been reassuring despite the uncertainty. Estimates for the current period (2025 Q2) have been under pressure, with bigger declines in estimates compared to other recent post-COVID periods. That said, estimates for the Tech sector have notably stabilized lately. For 2025 Q2, total S&P 500 earnings are expected to be up +5.9% from the same period last year on +3.8% higher revenues. Q2 estimates have been steadily coming down, with the magnitude and breadth of negative estimate revisions greater than had been the case in the comparable periods of other recent quarters. What's Happening to 2025 Q2 Earnings Estimates? The start of Q2 coincided with heightened tariff uncertainty following the punitive April 2 nd 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 +5.9% from the same period last year on +3.8% higher revenues. The chart below shows how Q2 earnings growth expectations have evolved since the start of the year. While it is not unusual for estimates to be adjusted lower, the magnitude and breadth of the 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 13 of the 16 Zacks sectors, with the biggest declines for the Transportation, Autos, Energy, Construction, and Basic Materials sectors. Estimates for the two largest earnings contributors to the index – Tech & Finance – have declined since the quarter began. Tech sector earnings are expected to be up +12.4% in Q2 on +9.8% 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 reversed course in recent weeks, as we have been flagging lately. You can see this reversal in the sector's revisions trend in the chart below. This favorable turn in the Tech sector's revisions trend can be seen in expectations for full-year 2025 as well, as the chart below shows. Hard to tell at this stage how durable this reversal in the Tech sector's estimates will prove to be, but the favorable turn in the sector's Q2 estimates at least proves that the shift to the annual growth pace isn't solely a function of strong positive Q1 earnings releases, particularly from the Mag 7 players. We can see this trend reversal in the estimates for Microsoft MSFT, Alphabet GOOGL, and Meta META. The current Q2 Zacks Consensus EPS estimate for Alphabet of $2.12 is down from $2.15 on April 4 th, but is up from $2.08 on April 25 th and $2.07 a week prior to that. Similarly, for Meta, the current Q2 EPS estimate of $5.84 is down from $5.94 on April 4 th, but up from $5.70 on May 2 nd and $5.51 on April 25 th. The revisions trend for Microsoft is similar, though the company's current Q2 estimate is modestly higher relative to where it stood at the start of April. You can rest assured that we will be closely monitoring the Tech sector's revisions trend in the days ahead. The Earnings Big Picture The chart below shows expectations for 2025 Q1 in terms of what was achieved in the preceding four periods and what is currently expected for the next three quarters. The chart below shows the overall earnings picture for the S&P 500 index on an annual basis. While estimates for this year have started coming down lately, there haven't been a lot of changes to estimates for the next two years at this stage. Given all-around worries about the economy's growth momentum, it is reasonable to expect these estimates to be lowered further in the days ahead as the tariffs impact starts showing up in data. The modestly negative GDP read for the first quarter of the year primarily reflected the anticipatory effects of the trade regime, with importers stocking up on supplies ahead of the new levies taking effect. 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 Up Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Microsoft Corporation (MSFT): Free Stock Analysis Report Alphabet Inc. (GOOGL): Free Stock Analysis Report Meta Platforms, Inc. (META): Free Stock Analysis Report
