Exxon, Chevron, Google, Microsoft and IBM are part of Zacks Earnings Preview: - Press Releases

For Immediate Release
 
Chicago, IL – March 30, 2015 – Zacks.com releases the list of companies likely to issue earnings surprises. This week’s list includes Exxon (XOM-Free Report), Chevron (CVX-Free Report), Google (GOOGL-Free Report), Microsoft (MSFT-Free Report) and IBM (IBM-Free Report).
 
To see more earnings analysis, visit https://at.zacks.com/?id=3207.
 
Every day, Zacks.com makes their Bull Stock of the Day available, free of charge. To see it, click here.
 
Are Negative Q1 Earnings Revisions Unusual?
 
The fact that Q1 estimates came down over the last couple of months is not something unique to the period. This has been the trend for quite some time and has become particularly notable over the last couple of years as management teams have been consistently providing weak guidance, causing estimates to come down.

One could cite a variety of reasons for why this has been the norm lately, but the most logical though cynical explanation is that management teams have a big incentive to manage expectations. After all, it pays to under-promise and over-deliver.

For 2015 Q1, we started at +4% in early January, which has effectively flipped by now. But if history is any guide, then the actual growth rate will likely be in the vicinity of where we started out in January. Other than 2014 Q4, this has been the pattern repeatedly in recent quarters. Keep in mind, however, that while the trend of negative revisions is no different from other recent periods, the magnitude of negative revisions for 2015 Q1 exceeds any other recent quarter by a big margin.

The Energy sector’s travails resulting from the sharp drop in oil prices are well known; we saw that in the sector’s performance in the last earnings season as well when total earnings for the Energy sector were down -17.3% on -13.5% lower revenues. The Energy sector was a drag on the aggregate growth picture in 2014 Q4 and perhaps something similar was at play in the unusually high level of negative revisions in 2015 Q1 as well.

This is a valid point and the negative revisions for the Energy sector does provide a big part of the explanation for why Q1 estimates have fallen so much. After all, total earnings estimates for the sector have almost been halved since the start of the quarter in early January. The current Zacks Consensus EPS estimates for Exxon (XOM-Free Report) and Chevron (CVX-Free Report) of $0.79 and $0.74 are down -34.2% and -51.6% over the last 90 days, respectively.

But it would be wrong to blame the Energy sector alone for the outsized negative revision. The magnitude of negative revisions to Q1 estimates is still the highest of any other recent quarter after we isolate and exclude the Energy sector from the aggregate picture.

Even the Technology sector has suffered negative revisions, with earnings for the sector now expected to be up only +1.8% from the same period last year vs. expectations of +9.1% growth at the start of the quarter. Estimates for all the key sector players like Google (GOOGL-Free Report), Microsoft (MSFT-Free Report) and IBM (IBM-Free Report) have come down since January.

Are Q1 Estimates Too Low?

The pronounced downshift in Q1 estimates has prompted some on Wall Street to start claiming that the revisions trend may have a gone bit too much; meaning that estimates have likely become too low. Hard to find a basis for such a claim in real time, particularly given the global growth woes and still-high U.S dollar.

The market’s reaction to the results from the 16 S&P 500 members that have already reported Q1 results (all of these companies have reported fiscal February quarter results that get counted as part of the Q1 tally) doesn’t support the claim that estimates may be too low.
 
About Zacks
 
Zacks.com is a property of Zacks Investment Research, Inc., which was formed in 1978. The later formation of the Zacks Rank, a proprietary stock picking system; continues to outperform the market by nearly a 3 to 1 margin. The best way to unlock the profitable stock recommendations and market insights of Zacks Investment Research is through our free daily email newsletter; Profit from the Pros.  In short, it's your steady flow of Profitable ideas GUARANTEED to be worth your time! Register for your free subscription to Profit from the Pros.
 
Get the full Report on XOM - FREE
Get the full Report on CVX - FREE
Get the full Report on GOOGL - FREE
Get the full Report on MSFT - FREE
Get the full Report on IBM - FREE
 
Follow us on Twitter:  https://twitter.com/zacksresearch
 
Join us on Facebook:  https://www.facebook.com/home.php#/pages/Zacks-Investment-Research/57553657748?ref=ts
 
Zacks Investment Research is under common control with affiliated entities (including a broker-dealer and an investment adviser), which may engage in transactions involving the foregoing securities for the clients of such affiliates.
 
Media Contact
Zacks Investment Research
800-767-3771 ext. 9339
support@zacks.com
https://www.zacks.com
 
Zacks.com provides investment resources and informs you of these resources, which you may choose to use in making your own investment decisions. Zacks is providing information on this resource to you subject to the Zacks "Terms and Conditions of Service" disclaimer. www.zacks.com/disclaimer.
 
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 https://www.zacks.com/performance for information about the performance numbers displayed in this press release.

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
 
EXXON MOBIL CRP (XOM): Free Stock Analysis Report
 
CHEVRON CORP (CVX): Free Stock Analysis Report
 
GOOGLE INC-CL A (GOOGL): Free Stock Analysis Report
 
MICROSOFT CORP (MSFT): Free Stock Analysis Report
 
INTL BUS MACH (IBM): Free Stock Analysis Report
 
To read this article on Zacks.com click here.