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6 hours ago
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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. Image Source: Zacks Investment Research 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. Image Source: Zacks Investment Research 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. Image Source: Zacks Investment Research The chart below shows the overall earnings picture on a calendar-year basis. Image Source: Zacks Investment Research 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. Image Source: Zacks Investment Research 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. Image Source: Zacks Investment Research The comparison charts below put the Q2 EPS and revenue beats percentages in a historical context. Image Source: Zacks Investment Research 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. For a detailed view of the evolving earnings picture, please check out our weekly Earnings Trends report here >>>> A Closer Look At Q2 Earnings: What Can Investors Expect? 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 This article originally published on Zacks Investment Research ( Zacks Investment Research Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
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15 hours ago
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Why Is Synopsys (SNPS) Up 9% Since Last Earnings Report?
It has been about a month since the last earnings report for Synopsys (SNPS). Shares have added about 9% in that time frame, outperforming the S&P 500. Will the recent positive trend continue leading up to its next earnings release, or is Synopsys due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important drivers. It turns out, estimates revision have trended downward during the past month. Currently, Synopsys has a subpar Growth Score of D, a grade with the same score on the momentum front. Charting a somewhat similar path, the stock was allocated a grade of F on the value side, putting it in the lowest quintile for this investment strategy. Overall, the stock has an aggregate VGM Score of F. 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. Notably, Synopsys has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months. 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 Synopsys, Inc. (SNPS) : Free Stock Analysis Report This article originally published on Zacks Investment Research ( Zacks Investment Research Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
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15 hours ago
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Why Is Capri Holdings (CPRI) Down 5.3% Since Last Earnings Report?
It has been about a month since the last earnings report for Capri Holdings (CPRI). Shares have lost about 5.3% in that time frame, underperforming the S&P 500. Will the recent negative trend continue leading up to its next earnings release, or is Capri Holdings due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important catalysts. It turns out, fresh estimates flatlined during the past month. The consensus estimate has shifted 48.57% due to these changes. Currently, Capri Holdings has a subpar Growth Score of D, however its Momentum Score is doing a bit better with a C. Charting a somewhat similar path, the stock was allocated a grade of B on the value side, putting it in the top 40% for this investment strategy. Overall, the stock has an aggregate VGM Score of C. If you aren't focused on one strategy, this score is the one you should be interested in. Capri Holdings has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months. 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 Capri Holdings Limited (CPRI) : Free Stock Analysis Report This article originally published on Zacks Investment Research ( Zacks Investment Research Sign in to access your portfolio
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15 hours ago
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Why Is HP (HPQ) Down 1% Since Last Earnings Report?
A month has gone by since the last earnings report for HP (HPQ). Shares have lost about 1% in that time frame, underperforming the S&P 500. Will the recent negative trend continue leading up to its next earnings release, or is HP 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 -12.43% due to these changes. At this time, HP has a subpar Growth Score of D, though it is lagging a bit 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 C. 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. Notably, HP has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months. 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 HP Inc. (HPQ) : Free Stock Analysis Report This article originally published on Zacks Investment Research ( Zacks Investment Research
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18 hours ago
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Rigetti Bets on In-House Manufacturing to Accelerate Quantum Advantage
Rigetti Computing RGTI is sharpening its competitive focus through deep vertical integration. The company's Fab-1 facility in Fremont now supports the full quantum chip lifecycle, from design and fabrication to cryo-microwave testing and packaging. In late 2022, Rigetti nearly doubled Fab-1's capacity by adding 5,000 square feet of clean-room space dedicated to wafer manufacturing and new cryo-microwave testing capabilities. This approach positions Rigetti to reduce iteration cycles, protect intellectual property, and potentially deliver faster improvements in fidelity and scale, key to staying relevant in a rapidly evolving industry. Unlike most of its peers, which rely on outsourced fabs or cloud-first models, Rigetti is making a long-term bet on hardware self-sufficiency. This in-house manufacturing edge sets Rigetti apart in a landscape dominated by cloud-led or software-centric models. By controlling every layer of the hardware stack, Rigetti can rapidly prototype, test, and refine its quantum processors, aligning closely with the needs of research institutions, defense agencies, and enterprises seeking customized on-premise solutions. With competitors like IBM focusing on large-scale cloud deployments and QPU access via third-party platforms, Rigetti's vertically integrated Fab-1 strategy positions it to win in use cases where performance consistency, system-level customization, and data sovereignty are mission-critical. International Business Machines IBM, a longtime leader in superconducting quantum computing, offers a robust full-stack quantum platform via its IBM Quantum systems and Qiskit software. However, IBM does not manufacture its quantum chips in-house; it utilizes external fabrication foundries for its superconducting qubit wafers. While IBM leads in coherence and cloud deployment scale, operating over 60 quantum systems globally, Rigetti's control over its fab and packaging enables faster hardware iteration and tighter integration for system deployment, particularly for on-premise or specialized installations. Quantum Computing Inc. QUBT takes an entirely different approach, focusing on software with its Qatalyst platform, which interfaces with multiple third-party QPUs. While this allows QUBT to remain asset-light and flexible, it limits performance tuning at the hardware level. In contrast, Rigetti's vertically integrated Fab-1 strategy ensures end-to-end control of the quantum stack, enabling optimization from qubit architecture to system-level deployment. Shares of RGTI have lost 27.2% in the year-to-date period against the industry's growth of 14.1%. Image Source: Zacks Investment Research From a valuation standpoint, Rigetti trades at a price-to-book ratio of 15.39, above the industry average. RGTI carries a Value Score of F. Image Source: Zacks Investment Research The Zacks Consensus Estimate for Rigetti's 2025 earnings implies a significant 86.1% rise from the year-ago period. Image Source: Zacks Investment Research The stock currently carries a Zacks Rank #4 (Sell). You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here. 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 International Business Machines Corporation (IBM) : Free Stock Analysis Report Rigetti Computing, Inc. (RGTI) : Free Stock Analysis Report This article originally published on Zacks Investment Research ( Zacks Investment Research Sign in to access your portfolio
