EC Previewing Big Tech Earnings

Take a look at the pandemic impacted numbers for 2020 for the group and contrast that to the overall profitability picture for the S&P 500 when the index’s earnings and revenues declined by -13.1% and -1.7%, respectively.

When some people refer to these companies as ‘defensive’ Tech, they are essentially referring to this earnings power that has visibility and stability.

Beyond the big 5 Tech players, total Q1 earnings for the Technology sector as a whole are expected to be up +24.9% from the same period last year on +18.4% higher revenues. The chart below shows the sector’s Q1 earnings and revenue growth expectations in the context of where growth has been in recent quarters and what is expected in the coming four periods.

This big picture view of the ‘Big 5’ players as well as the sector as whole shows that estimates for the coming periods reflect a decelerating growth trend.

Microsoft and Alphabet will report after the market’s close on Tuesday this week (4/27), while Facebook and Apple will report after the market’s close on Wednesday (4/28) and Amazon on Thursday. Other notable reports this week include Tesla (TSLA - Free Report), Spotify (SPOT - Free Report), and a host of blue-chip operators in other sectors.

Q1 Earnings Season Scorecard

We now have Q1 results from 123 S&P 500 members or 24.6% of the index’s total membership. Total earnings (or aggregate net income) for these 123 companies are up +46.7% from the same period last year on +5.1% higher revenues, with 83.7% beating EPS and 75.6% beating revenue estimates.

We get into the heart of the Q1 reporting cycle this week, with more than 800 companies on deck to report results, including 180 S&P 500 members.

The two sets of comparison charts below put the Q1 results from these 123 index members in a historical context, which should give us a sense how the Q1 earnings season is tracking at this stage relative to other recent periods.

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