Global Weekly Ahead
Q4 Earnings Season ScorecardWhile no earnings releases are scheduled for today on account of the MLK Day holiday, the rest of this week will see more than 100 companies report Q4 results, including 36 S&P 500 members. With results from 42 S&P 500 as of Friday, January 17th, we will have seen results from roughly 15% of the index’s membership by the end of this week.Total earnings for the 42 index members that have reported results already are up +21.8% from the same period last year on +7.3% higher revenues, with 81% beating EPS estimates and 71.4% beating revenue estimates.This is a notably better showing from this group of 42 index members relative to what we have seen from this same group in other recent periods, particularly on the growth front.Looking at Q4 as a whole, combining the actual results from the 42 index members with estimates for the still-to-come companies, total earnings are expected to be up +8.5% on +4.8% higher revenues.
Featured Analyst ReportsChevron shares have outperformed the Zacks Oil and Gas – Integrated – International industry over the past six months (+8.1% vs. +0.8%). The company is a fully integrated energy firm, Chevron is positioned as one of the top global integrated oil firms, set for sustainable production growth, particularly due to its dominant position in the lucrative Permian Basin.Further, the planned acquisition of Hess Corporation is expected to significantly strengthen Chevron’s presence in oil-rich Guyana. However, the company is grappling with high sensitivity to oil price fluctuations and relatively expensive valuation.Another concern is the sub-100% reserve replacement ratio, indicating challenges in replenishing produced energy. Considering all these factors, investors are advised to wait for a better entry point.
Shares of Merck have underperformed the Zacks Large Cap Pharmaceuticals industry over the past year (-17.2% vs. -3.4%). The company is facing generic competition for several drugs, rising competitive pressure on diabetes franchise and declining Gardasil sales in China may hurt the top line. There are concerns about Merck’s ability to grow its non-oncology business ahead of Keytruda’s loss of exclusivity in 2028.Estimates have declined ahead of Q4 results. Merck has a positive record of earnings surprises in recent quarter. Nevertheless, Blockbuster drug, Keytruda, and new products have been driving Merck’s sales.With continued label expansion into new indications, particularly earlier-stage launches, Keytruda is expected to see continued growth. Animal health and vaccine products are core growth drivers. Merck boasts a strong cancer pipeline and is investing in M&A activity to strengthen its pipeline.QUALCOMM shares have gained +13.2% over the past year against the Zacks Wireless Equipment industry’s gain of +28.3%. The company is increasingly focusing on the seamless transition from a wireless communications firm for the mobile industry to a connected processor firm for the intelligent edge. With the accelerated rollout of 5G technology, it is benefiting from investments toward building a licensing program in mobile.Qualcomm received a favorable verdict in a legal dispute against Arm Holdings, allowing the company to continue developing high-performing, best-in-class products based on Oryon ARM-compliant custom CPUs.However, it faces stiff competition in the mobile phone chipset market. The majority of its customers include Chinese manufacturers, which further clouds the revenue-generating potential, owing to strained bilateral trade relationships with the United States. The high debt burden is a concern.Shares of CSP have outperformed the Zacks Computer – Integrated Systems industry over the past year (+45.1% vs. +2.9%). This microcap company with market capitalization of $160.59 million have ended fiscal 2024 with $30.6 million in cash, up from $25.2 million, enabling growth investments like AZT PROTECT and high-margin services while maintaining a debt-free balance sheet.Recurring revenue rose to 17% of sales, driven by managed services and cloud solutions. AZT PROTECT gains traction via Rockwell partnerships and major contracts, enhancing cybersecurity market positioning. Niche expansions in cruise and freightliner markets diversify revenue. Strategic shifts to high-margin offerings improve profitability, supported by partnerships and industry awards.However, CSP posted a $1.9 million operating loss, with rising SG&A costs and dependence on key customers adding revenue volatility. HPP segment revenue fell 40%, hurt by legacy product phase-outs. Scaling new products demands heavy investment, pressuring near-term results.AMCON Distributing’s have underperformed the Zacks Retail – Supermarkets industry over the past year (-39.5% vs. +68.4%). This microcap company with market capitalization of $81.41 million have reliance on declining cigarette sales, rising costs, regulatory risks and competitive pressures pose challenges. With $121.3 million in debt and increasing interest expenses, AMCON must navigate cost pressures to sustain growth.Nevertheless, AMCON’s strategic acquisitions, including Arrowrock Supply, have expanded its distribution network to 14 centers across 34 states, enhancing reach to 8,000 retail locations and driving economies of scale, operational synergies, and revenue diversification.Fiscal 2024 wholesale revenue rose $171.6 million, driven by acquisitions and growth in alternative tobacco, confectionery, and foodservice categories. Its health and wellness retail segment benefits from rising demand for natural products, achieving a gross margin of 36.7% in fiscal 2024. Investments in logistics, including new facilities in Colorado and Missouri, bolster operational efficiency.Other noteworthy reports we are featuring today include Deere & Company (DE), Synopsys, Inc. (SNPS), and DTE Energy Company (DTE).More By This Author:What Do Early Q4 Earnings Results Show?Q4 Earnings Season Kicks Off StrongTop Stock Reports For Tesla, Bank Of America & Alibaba
