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Adobe, Oracle, Costco and AutoZone are part of Zacks Earnings Preview

For Immediate Release

Chicago, IL – June 17, 2024 – releases the list of companies likely to issue earnings surprises. This week’s list includes Adobe ADBE, Oracle ORCL, Costco COST and AutoZone AZO.

Q2 Earnings Season Gets Underway

The recent Adobe and Oracle quarterly releases kicked off the 2024 Q2 earnings season. These results from the two Tech players followed quarterly reports from Costco and AutoZone for their respective fiscal quarters ending in May.

We and other research organizations engaged in tracking earnings results in real time count such May-quarter results as part of the overall June-quarter or Q2 tally.

In fact, by the time the big banks release their quarterly results on July 12th, we will have such Q2 results from almost two dozen S&P 500 members.

Regular readers of our earnings commentary are familiar with our sanguine view of corporate profitability. The growth picture has been steadily improving over the last few quarters, and the revisions trend has notably stabilized lately.

The 'doom & gloom view' of corporate profitability that a noisy market segment appeared to subscribe to last year has largely moved to the fringes. Driving this evolution has been the U.S. economy's resilient performance in the face of the Fed's extraordinary tightening. With the Fed now gearing up to start easing policy in the coming months, many of the dire risks to the economy and corporate earnings have eased significantly.

This is the macro backdrop in which we digested the Q1 earnings season and will receive the Q2 earnings results in the coming days.

The current expectation is that Q2 earnings for the S&P index will be up +8.6% from the same period last year on +4.6% higher revenues. This would follow the +6.7% earnings growth on +3.2% revenue gains in 2024 Q1.

As we have consistently flagged in our commentaries, the revisions trend for 2024 Q2 and full-year 2024 has been very favorable lately.

Q2 estimates went up after the period got underway, started coming down only in recent weeks, and still remain only a hair below where they stood at the start of the quarter.

The improving earnings outlook for the Energy sector has been a major contributor to this favorable revisions trend at the index level. But the Energy sector isn't the only sector that has enjoyed positive estimate revisions since the start of April. Other sectors enjoying positive estimate revisions include Transportation, Utilities, Tech, and Autos. On the negative side, estimates have been cut for 11 of the 16 Zacks sectors, with notable declines in Industrial Products, Aerospace, Consumer Staples, Conglomerates, Construction, and others.

Embedded in current Q2 earnings and revenue estimates is a steady improvement in margins, continuing the positive trend that has been in place since 2023 Q3.

For 2024 Q2, net margins are expected to be above the year-earlier level for 9 of the 16 Zacks sectors, with the biggest gains at Tech, Medical, Finance, Consumer Discretionary, and others. On the negative side, margins are expected to be below the year-earlier level for 7 of the 16 Zacks sectors, with major pressure at Basic Materials, Autos, Transportation, and other sectors.

The Tech sector has been a major contributor to the index growth in recent quarters. That trend is also expected to remain in place in 2024 Q2, with total earnings for the sector expected to be up +15.3% on +9.4% higher revenues paired with a 117-basis point expansion in net margins.

The period of easy comparisons is coming to an end, but the overall margins outlook is still favorable for the space.

Looking at the overall earnings picture on an annual basis, total 2024 S&P 500 earnings are expected to be up +9.2% on +1.7% revenue growth.

Q2 Earnings Season Scorecard

As noted earlier, the recent earnings reports from Adobe, Oracle, Costco, and AutoZone for their respective fiscal quarters ending in May get counted as part of our official 2024 Q2 earnings tally. This week brings an additional 7 S&P 500 members reporting similar Q2 results, including Darden Restaurants, Accenture, Lennar, and others.

For the four S&P 500 members that have reported their fiscal May quarter results already, total earnings are up +6.2% from the same period last year on +7.8% higher revenues, with all four beating EPS estimates and only one of the four able to beat revenue estimates.

For a detailed look at the overall earnings picture, including expectations for the coming periods, please check out our weekly Earnings Trends report >>>> What Will the Q2 Earnings Season Show?

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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 information about the performance numbers displayed in this press release.

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Oracle Corporation (ORCL) : Free Stock Analysis Report

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AutoZone, Inc. (AZO) : Free Stock Analysis Report

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