Q3 Earnings Season Scorecard and Analyst Reports for JPMorgan, Canadian Pacific & Equinix

Tuesday, November 8, 2022

The Zacks Research Daily presents the best research output of our analyst team. Today's Research Daily features a real-time update on the Q3 earnings season and new research reports on 16 major stocks, including JPMorgan Chase & Co. (JPM), Canadian Pacific Railway Limited (CP) and Equinix, Inc. (EQIX). These research reports have been hand-picked from the roughly 70 reports published by our analyst team today.

You can see all of today’s research reports here >>>

Q3 Earnings Season Scorecard

Including all of this morning's results, we now have Q3 earnings reports from 446 S&P 500 members or 89.2% of the index's total membership.

Total earnings for these 446 companies are up +2.3% from the same period last year on +12.6% higher revenues, with 70% beating EPS estimates and 68.2% beating revenue estimates.

The EPS and revenue beats percentages for these 446 index members is below what we had seen from the same group of companies in the last two years and below the 5-year averages, but otherwise within the historical range.

Estimates for the current and coming periods are still coming down. For 2022 Q4, total S&P 500 earnings are currently expected to decline -4.1% from the year-earlier period. This is down from +1.7% on October 7th and +2.5% on August 31st. For more details about the Q3 earnings season, please read our weekly Earnings Preview report here >>> 3 Things We Learned From the Q3 Earnings Season

Today's Featured Analsyt Reports

Shares of JPMorgan Chase have modestly underperformed the Zacks Major Banks industry over the past year (-21.7% vs. -20.8%). The company’s exposure to a weakening economic outlook remains the primary headwind, offsetting the benefits from improved margins as a result of the Fed's tightening cycle. Steadily rising operating expenses remains a key headwind.

Given the possibility of an economic downturn and to meet higher capital requirements, the bank has suspended buybacks. However, opening of new branches, strategic buyouts/investments and global expansion and digitization efforts are likely to keep driving the company’s financials.

Further, higher interest rates and steady growth in loan demand are expected to result in a robust improvement in net interest income (NII). Our estimates for NII (managed) suggest a CAGR of around 19% over the next three years.

(You can read the full research report on JPMorgan Chase here >>>)

Shares of Canadian Pacific Railway have outperformed the Zacks Transportation - Rail industry over the year-to-date period (+7.0% vs. -14.1%). The company expects double-digit RTM- growth in the second half of 2022 leading to volume and earnings growth for the year. The buyout of Kansas City Southern, completed last year, is a huge positive and should aid results in the coming quarters.

With gradual recovery in freight-market conditions, freight revenues, contributing majority to the top line, looks encouraging for the company. Canadian Pacific's efforts to pay out dividends to its shareholders instils investor confidence and positively impact the company's earnings per share.

However, higher operating expenses continue to weigh on the company's bottom line. High debt-to-equity ratio does not bode well and is risky as it implies that the company is aggressively financing its growth with debt. Partly due to these headwinds, the stock has declined in the past year.

(You can read the full research report on Canadian Pacific Railway >>>)

Shares of Equinix have underperformed the Zacks REIT and Equity Trust - Retail industry over the past year (-24.0% vs. -19.0%). The company’s huge capital outlay for expansion is a concern as interest rate hikes might adversely impact the borrowing costs to fund these projects. Also, stiff competition from industry peers may lead to aggressive pricing.

The recent estimate revisions trend for 2022 funds from operations (FFO) per share indicates an unfavorable outlook. However, Equinix’s second-quarter results were driven by steady growth in colocation and inter-connection revenues, marking the 78th consecutive quarter of top-line growth.

Its global data-center portfolio is set to gain from the high demand for inter-connected data-center space, given the rise in enterprise cloud adoption and Internet customers’ demand. Equinix focuses on acquisitions and developments to expand its data-center capacity in key markets.

(You can read the full research report on Equinix here >>>)

Other noteworthy reports we are featuring today include Halliburton Company (HAL), Gartner, Inc. (IT), and Datadog, Inc. (DDOG).

Sheraz Mian
 
Director of Research

Note: Sheraz Mian heads the Zacks Equity Research department and is a well-regarded expert of aggregate earnings. He is frequently quoted in the print and electronic media and publishes the weekly Earnings Trends and Earnings Preview reports. If you want an email notification each time Sheraz publishes a new article, please click here>>>

Today's Must Read

Higher Rates, Buyouts Aid JPMorgan (JPM), Fee Income a Woe

Freight Revenues Save Canadian Pacific (CP), Cost Woes Sting

Expansion Efforts Aid Equinix (EQIX) Amid Stiff Competition

Featured Reports

Pro-Investor Steps Boost Gartner (IT) Despite Low Liquidity
The Zacks analyst lauds Gartner's endeavor to reward its shareholders in the form of share buybacks. However, decreasing current ratio is worrisome.

Strong Adoption of Cloud Services Drives Datadog's (DDOG) Prospects
Per the Zacks analyst, Datadog is benefiting from the strong adoption of cloud-based monitoring products and strong tie-ups with Amazon and Microsoft.

Solid Budget Aids Teledyne (TDY), Strengthening Dollar Hits
Per the Zacks Analyst, increased U.S. defense budget boost growth prospects for Teledyne. Yet, strengthening U.S. dollar is impacting airlines' performance that may hurt the stock.

Strategic Buyouts Benefit CNH Industrial's (CNHI) Portfolios
Acquisitions of Raven Industries and Sampierana are boosting CNH Industrial's agriculture and construction portfolios. Per the Zacks analyst, strength in the segments bodes well for long-term growth.

Wynn Resorts (WYNN) Banks on Non-Gaming Revenues, Traffic Low
Per the Zacks analyst, Wynn Resorts is likely to gain from robust non-gaming business and expansion efforts in domestic markets. However, coronavirus-induced lower visitation in Macau is a concern.

F5 (FFIV) Rides on Firm Growth in Software Business
Per the Zacks analyst, F5 is benefiting from strong growth in software, driven by security offerings, such as web application firewall, bot defense and mitigation products.

PBF Energy (PBF) Banks on its Strong Refining Business
The Zacks analyst likes PBF Energy's refining operations since the firm is witnessing an increasing gross refining margin per barrel of throughput.

New Upgrades

Halliburton (HAL) to Benefit from North American Exposure
The Zacks analyst believes that Halliburton can take advantage of the tight fundamentals of the North American land drilling space through its market-leading pressure pumping operations.

The J. M. Smucker (SJM) Gains From Efficient Pricing Efforts
Per the Zacks analyst, The J. M. Smucker has been benefiting from positive net price realization. Management's sales guidance for fiscal 2023 reflects the positive impacts of elevated net pricing.

Higher Transaction Fees, Acquisitions Aid Cboe Global (CBOE)
Per the Zacks analyst, Cboe Global is set to grow on higher transaction fees driven by trading volume growth given solid proprietary products. Also, buyouts have diversified its product portfolio.

New Downgrades

Qorvo (QRVO) Plagued by Soft Demand Trends, High Inventory
Per the Zacks analyst, Qorvo is likely to be plagued by continued weakness across end markets and acute inventory correction at Android-based smartphone customers, which led to a muted outlook.

Silicon Motion (SIMO) Marred by Production Delay, Supply Woes
Per the Zacks analyst, pandemic-led production delays and supply chain constraints are likely to hinder the near-term prospects of Silicon Motion, while tense political conditions remain headwinds.

Exposure to Catastrophe Loss, Rising Expenses Hurt Palomar (PLMR)
Per the Zacks analyst, higher losses from catastrophes affect Palomar's underwriting results. Also rising expenses due to underwriting and acquisition expenses weigh on margin expansion.

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
 
JPMorgan Chase & Co. (JPM) : Free Stock Analysis Report
 
Halliburton Company (HAL) : Free Stock Analysis Report
 
Equinix, Inc. (EQIX) : Free Stock Analysis Report
 
Canadian Pacific Railway Limited (CP) : Free Stock Analysis Report
 
Gartner, Inc. (IT) : Free Stock Analysis Report
 
Datadog, Inc. (DDOG) : Free Stock Analysis Report
 
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