Economic & Earnings Data Deluge

The Q1 earnings parade continues ahead of the opening bell today, with focus on Wall Street finance corporations slowly giving way to other industries: Morgan Stanley MS, PepsiCo PEP and Kansas City Southern KSU are among those companies putting out Q1 earnings results this morning.

Investment banking major Morgan Stanley — incidentally, a Zacks Rank #5 (Strong Sell) stock with a Zacks Style Score (Value, Growth, Momentum) of F; literally the worst rating a company can get — outperformed estimates on both top and bottom lines this morning: $1.33 per share outpaced the $1.17 expected (though below the $1.45 in the year-ago quarter), while revenues of $10.29 billion surpassed estimates by 2.9%.

This marks Morgan Stanley’s third beat in its last four quarters, and its stock had gained 18.6% year to date as of Tuesday’s close. Shares are up another 2% ahead of today’s open. We expect analysts to get busy amending Morgan Stanley’s estimates going forward, which may mean the stock may find itself out of the basement before long. For more on MS’ earnings, click here.

Zacks Rank #3 (Hold)-rated PepsiCo topped earnings estimates by a solid nickel to 97 cents per share, while also beating on revenues. Organic sales growth was the notable success story in the quarter, +5.2% and the strongest Pepsi has reported in the past three years. Snacks in particular were strong, with its Frito-Lay brand growing 6% in the company’s Q1. Recently promoted CEO Ramon LaGuarta sees his increases in ad spending paying off in the short term. Shares are up 2% in today’s pre-market.

Railway major Kansas City Southern also outperformed expectations in its Q1, bringing in $1.54 per share versus the expected $1.45 and $1.30 in the year-ago quarter. Revenues of $674.8 million topped the Zacks consensus by roughly 1%. Both top and bottom-line figures mark just the second time in the past quarters that actuals have beaten estimates. For more on KSU’s earnings, click here.

A delayed read on the U.S. Trade Balance (deficit) for February — due to the weeks-long government shutdown to start 2019 — shows a better-than-expected figure: -$49.4 billion, well below the -$53.5 billion expected, and lower than the unrevised -$51.1 billion for January. This February read is the lightest trade deficit since June of 2018.

This afternoon, we look forward to seeing a new edition of the Beige Book. This comprehensive volume, tracking economic progress according to federal banks across the country, is a bi-quarterly report. In the most recent read, slower economic activity was a result of the aforementioned government shutdown, which affected retail, auto sales, real estate and tourism, just to name a few.

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