This week 380 publicly traded companies are reporting for the third quarter, 130 are S&P 500 constituents.
Here’s how sector growth stands now:
Here are the most interesting earnings and economic reports this week where Estimize data is showing a significant deviation from the Wall Street consensus.
Monday, October 20:
This quarter is all about the launch of the iPhone 6 and the iPhone 6 Plus. On the opening weekend alone Apple sold over 10 million units of the new models. Analysts and investors agree that Apple is poised for a big quarter, the only question that remains is just how successful this 3 month period will be. Analysts on Estimize are expecting $1.36 in earnings per share (EPS) while Wall Street is looking for $1.30. Estimize contributors also expect Apple to do $40.518B in sales, more than $500M more than Wall Street is predicting. While this should be a great quarter for Apple, next quarter is where the lion’s share of sales will fall. As of this morning the Estimize community is predicting that Apple’s holiday quarter revenue will surpass $65B.
Tuesday, October 21:
US Existing Home Sales
With recent weakness in pending home sales and home prices, Tuesday’s Existing Home Sales report will provide an important update on housing. The Estimize consensus is calling for an annual rate of 5.05M, a 0.2% increase MoM.
Tuesday Yahoo is expected to top the Wall Street consensus by a small margin on the top and bottom line. The Wall Street Journal is also reporting that on Tuesday Yahoo CEO Marissa Mayer will announce a “new plan” for the company’s turnaround strategy. Douglas MacMillan is reporting that Mayer will defend her spending on acqui-hires and offer to make fewer acquisitions in a exchange for larger ones which could move the needle on Yahoo’s fundamentals. After selling a portion of its Alibaba stake into the IPO Yahoo now has about $7B cash it could spend. In total 32 mergers and acquisitions predictions have been made about Yahoo on Mergerize.
Wednesday, October 22:
US Consumer Price Index
After falling 0.2% in August, inflation is expected to rise 0.07% in September according to Estimize contributors, possibly enough to concern Fed doves who may want to tighten up on policy.
Yelp will be one to watch when they report earnings on Wednesday. During the third quarter the company struggled with negative press regarding alleged manipulation of reviews and continued to face stiff competition in its local ad segment from the likes of Google, Facebook and TripAdvisor, all of which have increased their focus on local advertising in recent years. Last quarter, Yelp finally broke even, posting positive EPS for the first time since it’s IPO. For the third quarter, Estimize contributors are expecting EPS to come in at $0.05 vs. Wall Street which is expecting $0.03, both well above the year-ago actual of -$0.04. Revenues are anticipated to post $99.4M in comparison to the Street’s slightly lower estimate of $98.9M, which would mark a whopping 62% increase YoY.
The world’s largest planemaker had some big wins during the third quarter. Among them, the company confirmed a $4.9B order from PT Garuda Indonesia for 50 single-aisle planes, a $990M order from Alaska Airlines for 10 Next-Generation 737-900ER planes, and that it will ramp up its 737 production to produce 52 planes a month by 2018. Despite all the good news, some worry the Ebola epidemic could ground future Boeing orders. For Q3, Estimize contributors are looking for EPS of $2.09 vs. the Street’s expectation of $1.97; this $0.12 difference represents one of the biggest Estimize-to-Wall Street deltas for any company reporting this week. Revenue estimates of $23.1B are just $100M above Wall Street, and would represent a 4.5% growth.
Thursday, October 23:
The pressure is on for Amazon this Thursday, as the need for new products and services to help boost profits hits a fever pitch. The stock is down 24% this year as investors continue to be disappointed with recent financial performance. While the trajectory for sales growth charges upward, high spending has squeezed profit margins. Some investors believe those investments will pay off, but nearly non-existent sales of the Amazon Fire phone in particular paint a less than encouraging picture. The Estimize EPS estimate currently is calling for $-0.58, $0.14 higher than the Wall Street expectation, one of the top 5 differences between the Estimize consensus and the Wall Street consensus. This is much worse than the year-ago actual of -$0.09. Revenue estimates of $20.9B are just slightly higher than the Street, and represent a 22.5% increase from Q3 2013.
Since taking the helm at Microsoft CEO Satya Nadella has focused on the tech giant’s enterprise business. One high profile example is the deal that brings Microsoft Office to Apple’s iOS devices. Estimize contributors are expecting Microsoft to earn 5 cents (10%) more than the Wall Street earnings forecast and report marginally ahead of revenue estimates (<1%). Microsoft is also getting ready to release Windows 10 sometime next year. On September 30 Microsoft showed off the next generation of its flagship operating system featuring many requested improvements from Windows 8, exciting investors and techies alike.
Under Armour (UA)
As Under Armour gains market share in the footwear industry, and grows their apparel segment sales faster than competitors Lululemon and Nike, investors will be paying attention to Thursday’s report to see if this pace of growth continued in the third quarter. History points to yes, as the company typically posts its highest revenue in it’s third fiscal quarter. Current expectations stand at EPS of $0.42, $0.02 higher than the Wall Street consensus, and representing YoY growth of 23%. Revenues are expected to fair even better, with an Estimize consensus of $936.1M, above the Street’s consensus of $927.59M, growing 29%.
Friday, October 17:
New Home Sales
For August, New Home Sales surged to an annual rate of 504K, the biggest monthly increase since January 1992. The report, however, is frequently volatile due to small sample size. For the month of September, Estimize contributors are expecting sales to fall back 5.73% to a pace of 475k.
Biggest Deltas for the Week of 10/20 - 10/24:
The five companies reporting this week that have the biggest spread between Estimize and Wall Street EPS estimates are:
1. Intuitive Surgical (ISRG) – Estimize Consensus: $3.39 vs. Wall Street: $3.71
2. American Airlines (AAL) – Estimize Consensus: $1.86 vs. Wall Street: $1.68
3. Amazon.com (AMZN)- Estimize Consensus: $-0.58 vs. Wall Street: $-0.74
4. KLA-Tencor (KLAC) - Estimize Consensus: $0.60 vs. Wall Street: $0.46
5. Boeing (BA) – Estimize Consensus $2.09 vs. Wall Street $1.97
How are we doing so far?
Of the 91 companies that have reported from our coverage universe, 63% beat the Estimize EPS consensus, while a much higher 75% beat the Wall Street Consensus. As far as revenues go, 49% of companies have surpassed the Estimize consensus, while 59% have beat the WS consensus.
Here is the sector breakdown. Note that companies within the Telecom and Utilities sectors have not yet reported.
Thus far, for the 91 companies that have reported from our coverage universe, Estimize has been more accurate 63% of the time compared to Wall Street on both revenue and EPS estimates combined, 64% more accurate on EPS alone, and 62% more accurate on revenues alone. See the sector breakdown below: