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Globe and Mail
13 hours ago
- Business
- Globe and Mail
Looking Ahead to the Q2 Earnings Season
The expectation is for Q2 earnings to increase by +5% from the same period last year on +4% higher revenues. This will be a material deceleration from the growth trend of recent quarters and will be the lowest earnings growth pace 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. As we have been consistently flagging, earnings estimates took a renewed hit at the start of Q2, following the early April tariff announcement. This was particularly notable for Q2, but estimates for the subsequent periods were also trimmed. While the revisions trend has notably stabilized in recent weeks, 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 earnings estimates have declined for 13 of the 16 Zacks sectors (Aerospace and Utilities are the only sectors whose estimates have increased), 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 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 in the tariff uncertainty after the more punitive version of the tariff regime was delayed. Analysts began revising their estimates downward in the immediate aftermath of the early April tariff announcements but appear to have since concluded that those punitive tariff levels are unlikely to be levied, helping to 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 $254.14 for 2025 and $287.31 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. Q2 Earnings Season Scorecard As noted earlier, we have already seen fiscal May-quarter results from 18 S&P 500 members, which we count as part of our Q2 tally. Total earnings for these 18 index members that have reported results are up +3.1% from the same period last year on +6.5% revenue gains, with 83.3% of the companies beating EPS estimates and 88.9% 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. 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. We have less than a dozen companies on deck to report results this holiday-shortened week, including Constellation Brands STZ from the S&P 500 index. Constellation produces alcoholic beverages, with a portfolio of beer-heavy products, including Modelo, Corona, and others. Constellation shares have been under pressure this year, with the stock down -27% in the year-to-date period and lagging the broader market's +3.8% gain. Constellation's core product, Modelo, is heavily indexed to Hispanic consumers, with over 50% of the brand's sales coming from this demographic group. While the labor market remains strong, consumption trends of this demographic group have been weighed down by affordability issues. Aluminum tariffs are another headwind for Constellation Brands, given the company's exposure to the industrial metal for beer cans. Among the notable recent earnings releases, market participants were pleased with the Nike NKE announcement but were less enthusiastic about the FedEx FDX report. Both companies have been big-time laggards lately, with Nike shares down -4.8% this year, even after the big post-release jump, and FedEx shares are down -18.5%. While there were undoubtedly a few 'green shoots' in the Nike release, the stock's strong positive reaction is more a function of how low expectations had been coming into the release rather than truly impressive numbers. Nike still faces multiple challenges, including margin pressure, a stagnant product portfolio, operational challenges in China (accounting for approximately 15% of total sales), and significant tariff exposure. We should note, however, that both Nike and FedEx beat top- and bottom-line consensus estimates. Zacks' Research Chief Picks Stock Most Likely to "At Least Double" Our experts have revealed their Top 5 recommendations with money-doubling potential – and Director of Research Sheraz Mian believes one is superior to the others. Of course, all our picks aren't winners but this one could far surpass earlier recommendations like Hims & Hers Health, which shot up +209%. See Our Top Stock to Double (Plus 4 Runners Up) >> 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 FedEx Corporation (FDX): Free Stock Analysis Report Constellation Brands Inc (STZ): Free Stock Analysis Report
Yahoo
13 hours ago
- Business
- Yahoo
Tokio Marine (TKOMY) Upgraded to Strong Buy: Here's Why
Investors might want to bet on Tokio Marine Holdings Inc. (TKOMY), as it has been recently upgraded to a Zacks Rank #1 (Strong Buy). This upgrade is essentially a reflection of an upward trend in earnings estimates -- one of the most powerful forces impacting stock prices. A company's changing earnings picture is at the core of the Zacks rating. The system tracks the Zacks Consensus Estimate -- the consensus measure of EPS estimates from the sell-side analysts covering the stock -- for the current and following years. The power of a changing earnings picture in determining near-term stock price movements makes the Zacks rating system highly useful for individual investors, since it can be difficult to make decisions based on rating upgrades by Wall Street analysts. These are mostly driven by subjective factors that are hard to see and measure in real time. As such, the Zacks rating upgrade for Tokio Marine is essentially a positive comment on its earnings outlook that could have a favorable impact on its stock price. The change in a company's future earnings potential, as reflected in earnings estimate revisions, and the near-term price movement of its stock are proven to be strongly correlated. The influence of institutional investors has a partial contribution to this relationship, as these big professionals use earnings and earnings estimates to calculate the fair value of a company's shares. An increase or decrease in earnings estimates in their valuation models simply results in higher or lower fair value for a stock, and institutional investors typically buy or sell it. Their transaction of large amounts of shares then leads to price movement for the stock. For Tokio Marine, rising earnings estimates and the consequent rating upgrade fundamentally mean an improvement in the company's underlying business. And investors' appreciation of this improving business trend should push the stock higher. Empirical research shows a strong correlation between trends in earnings estimate revisions and near-term stock movements, so it could be truly rewarding if such revisions are tracked for making an investment decision. Here is where the tried-and-tested Zacks Rank stock-rating system plays an important role, as it effectively harnesses the power of earnings estimate revisions. The Zacks Rank stock-rating system, which uses four factors related to earnings estimates to classify stocks into five groups, ranging from Zacks Rank #1 (Strong Buy) to Zacks Rank #5 (Strong Sell), has an impressive externally-audited track record, with Zacks Rank #1 stocks generating an average annual return of +25% since 1988. You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here >>>> . For the fiscal year ending March 2026, this company is expected to earn $4.04 per share, which is unchanged compared with the year-ago reported number. Analysts have been steadily raising their estimates for Tokio Marine. Over the past three months, the Zacks Consensus Estimate for the company has increased 5.2%. Unlike the overly optimistic Wall Street analysts whose rating systems tend to be weighted toward favorable recommendations, the Zacks rating system maintains an equal proportion of "buy" and "sell" ratings for its entire universe of more than 4,000 stocks at any point in time. Irrespective of market conditions, only the top 5% of the Zacks-covered stocks get a "Strong Buy" rating and the next 15% get a "Buy" rating. So, the placement of a stock in the top 20% of the Zacks-covered stocks indicates its superior earnings estimate revision feature, making it a solid candidate for producing market-beating returns in the near term. You can learn more about the Zacks Rank here >>> The upgrade of Tokio Marine to a Zacks Rank #1 positions it in the top 5% of the Zacks-covered stocks in terms of estimate revisions, implying that the stock might move higher in the near term. 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 Tokio Marine Holdings Inc. (TKOMY) : Free Stock Analysis Report This article originally published on Zacks Investment Research ( Zacks Investment Research
Yahoo
13 hours ago
- Business
- Yahoo
Why Is Macy's (M) Down 6.9% Since Last Earnings Report?
A month has gone by since the last earnings report for Macy's (M). Shares have lost about 6.9% in that time frame, underperforming the S&P 500. Will the recent negative trend continue leading up to its next earnings release, or is Macy's due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important drivers. It turns out, fresh estimates have trended downward during the past month. The consensus estimate has shifted -43.04% due to these changes. At this time, Macy's has an average Growth Score of C, though it is lagging a lot on the Momentum Score front with an F. However, the stock was allocated a grade of A on the value side, putting it in the top 20% for this investment strategy. Overall, the stock has an aggregate VGM Score of B. If you aren't focused on one strategy, this score is the one you should be interested in. Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. It's no surprise Macy's has a Zacks Rank #4 (Sell). We expect a below average return from the stock in the next few months. Macy's belongs to the Zacks Retail - Regional Department Stores industry. Another stock from the same industry, Dillard's (DDS), has gained 2.7% over the past month. More than a month has passed since the company reported results for the quarter ended April 2025. Dillard's reported revenues of $1.53 billion in the last reported quarter, representing a year-over-year change of -1.3%. EPS of $10.39 for the same period compares with $11.09 a year ago. For the current quarter, Dillard's is expected to post earnings of $3.47 per share, indicating a change of -24.4% from the year-ago quarter. The Zacks Consensus Estimate has changed +2.3% over the last 30 days. Dillard's has a Zacks Rank #3 (Hold) based on the overall direction and magnitude of estimate revisions. Additionally, the stock has a VGM Score of A. 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 Macy's, Inc. (M) : Free Stock Analysis Report Dillard's, Inc. (DDS) : Free Stock Analysis Report This article originally published on Zacks Investment Research ( Zacks Investment Research Sign in to access your portfolio
Yahoo
13 hours ago
- Business
- Yahoo
Why TripAdvisor (TRIP) is a Top Value Stock for the Long-Term
Taking full advantage of the stock market and investing with confidence are common goals for new and old investors alike. Many investors also have a go-to methodology that helps guide their buy and sell decisions. One way to find winning stocks based on your preferred way of investing is to use the Zacks Style Scores, which are indicators that rate stocks based on three widely-followed investing types: value, growth, and momentum. Finding good stocks at good prices, and discovering which companies are trading under their true value, are what value investors like to focus on. So, the Value Style Score takes into account ratios like P/E, PEG, Price/Sales, and Price/Cash Flow to highlight the most attractive and discounted stocks. Headquartered in Massachusetts, TripAdvisor, Inc. is one of the largest online travel research companies in the world. The company provides a platform for users to share reviews, ratings and opinions on hotels, destinations, attractions and restaurants. The company also facilitates bookings between hotel suppliers and consumers using its web portals. TRIP is a Zacks Rank #2 (Buy) stock, with a Value Style Score of B and VGM Score of A. Shares are currently trading at a forward P/E of 8.8X for the current fiscal year compared to the Internet - Commerce industry's P/E 24.8X. Additionally, TRIP has a PEG Ratio of 0.9 and a Price/Cash Flow ratio of 10.8X. Value investors should also note TRIP's Price/Sales ratio of 1X. Value investors don't just pay attention to a company's valuation ratios; positive earnings play a crucial role, too. Four analysts revised their earnings estimate upwards in the last 60 days for fiscal 2025. The Zacks Consensus Estimate has increased $0.11 to $1.47. TRIP has an average earnings surprise of 59.8%. Investors should take the time to consider TRIP for their portfolios due to its solid Zacks Ranks, notable earnings and valuation metrics, and impressive Value and VGM Style Scores. 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 TripAdvisor, Inc. (TRIP) : Free Stock Analysis Report This article originally published on Zacks Investment Research ( Zacks Investment Research
Yahoo
13 hours ago
- Business
- Yahoo
3 Reasons Why Growth Investors Shouldn't Overlook Wheaton Precious Metals (WPM)
Growth stocks are attractive to many investors, as above-average financial growth helps these stocks easily grab the market's attention and produce exceptional returns. But finding a great growth stock is not easy at all. In addition to volatility, these stocks carry above-average risk by their very nature. Also, one could end up losing from a stock whose growth story is actually over or nearing its end. However, the Zacks Growth Style Score (part of the Zacks Style Scores system), which looks beyond the traditional growth attributes to analyze a company's real growth prospects, makes it pretty easy to find cutting-edge growth stocks. Wheaton Precious Metals Corp. (WPM) is on the list of such stocks currently recommended by our proprietary system. In addition to a favorable Growth Score, it carries a top Zacks Rank. Studies have shown that stocks with the best growth features consistently outperform the market. And for stocks that have a combination of a Growth Score of A or B and a Zacks Rank #1 (Strong Buy) or 2 (Buy), returns are even better. While there are numerous reasons why the stock of this company is a great growth pick right now, we have highlighted three of the most important factors below: Arguably nothing is more important than earnings growth, as surging profit levels is what most investors are after. And for growth investors, double-digit earnings growth is definitely preferable, and often an indication of strong prospects (and stock price gains) for the company under consideration. While the historical EPS growth rate for Wheaton Precious Metals is 6.3%, investors should actually focus on the projected growth. The company's EPS is expected to grow 50.9% this year, crushing the industry average, which calls for EPS growth of 40.7%. Cash is the lifeblood of any business, but higher-than-average cash flow growth is more beneficial and important for growth-oriented companies than for mature companies. That's because, high cash accumulation enables these companies to undertake new projects without raising expensive outside funds. Right now, year-over-year cash flow growth for Wheaton Precious Metals is 18.6%, which is higher than many of its peers. In fact, the rate compares to the industry average of -1.8%. While investors should actually consider the current cash flow growth, it's worth taking a look at the historical rate too for putting the current reading into proper perspective. The company's annualized cash flow growth rate has been 11.7% over the past 3-5 years versus the industry average of 6.8%. Superiority of a stock in terms of the metrics outlined above can be further validated by looking at the trend in earnings estimate revisions. A positive trend is of course favorable here. Empirical research shows that there is a strong correlation between trends in earnings estimate revisions and near-term stock price movements. The current-year earnings estimates for Wheaton Precious Metals have been revising upward. The Zacks Consensus Estimate for the current year has surged 1.2% over the past month. While the overall earnings estimate revisions have made Wheaton Precious Metals a Zacks Rank #1 stock, it has earned itself a Growth Score of B based on a number of factors, including the ones discussed above. You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here. This combination positions Wheaton Precious Metals well for outperformance, so growth investors may want to bet on it. 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 Wheaton Precious Metals Corp. (WPM) : Free Stock Analysis Report This article originally published on Zacks Investment Research ( Zacks Investment Research
