The Q1 earnings season has crossed the half-way mark, with results from 267 S&P 500 members having on board as of Apr 27.
Per the latest Earnings Preview, approximately 76.8% of the companies delivered positive earnings surprises, while 73.8% surpassed top-line expectations. Further, 61.4% of these companies have topped the estimates on both the fronts.
Robust Performance From Tech Stocks
Technology is one of the 13 sectors which are anticipated to report double-digit earnings growth this quarter.
As of Apr 27, 64.7% S&P 500 companies belonging to the Tech sector have reported their first-quarter results, wherein earnings for these companies increased 31.3% year over year on 11.4% higher revenues.
The sector’s double digit year-over-year growth so far in the quarter under review can be attributed to robust performance from tech giants like Facebook, Amazon, Netflix, Intel, Microsoft and Google.
The tech sector experienced a tough first-quarter due to headwinds related to Trump’s trade restrictions, increasing regulatory actions in Europe, and growing concern over data privacy and security post Facebook’s Cambridge Analytica fiasco.
However, strong results proved that the sector hasn’t lost its mojo. Despite significant negative press, Facebook delivered impressive results driven by higher mobile ad revenues, expanding user base and growing instagram.
Amazon crushed estimates driven by expanding Amazon Web Services (AWS) customer base and Prime growth. Microsoft Azure continued its solid growth during the quarter.
The increasing demand for semiconductor chips that harnesses cloud computing and emerging trends of artificial intelligence (AI) and machine learning drove results for Intel. Moreover, increasing demand for solutions related to self-driving vehicles and Internet of Things (IoT) boost top-line growth.
Total earnings for the tech sector are now expected to increase 27.9%, while revenues are expected to grow 12.5% higher on a year-over-year basis.
According to the Zacks model, a company with a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) has a good chance of beating estimates if it also has a positive Earnings ESP. The Sell-rated stocks (Zacks Rank #4 or 5) are best avoided. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Here we take a look at four companies which belong to electronic industry and are set to report first-quarter results on May 2.
AMETEK, Inc. AME, based in Berwyn, PA, is a leading manufacturer of electronic appliances and electromechanical devices. We believe an expanding product portfolio will continue to aid the company’s performance in the going-to-be reported quarter.
Moreover, the execution of its four core growth strategies — operational excellence, global market expansion, investments in product development and strategic acquisitions are expected to continue benefiting AMETEK’s first-quarter results. (Read more: AMETEK (AME) Warms Up to Q1 Earnings: What's in the Offing?)
However, AMETEK currently has a Zacks Rank #2 and its Earnings ESP of -0.14%. Thus, the company’s earnings are unlikely to beat estimates this time.