- (1:00) – Q4 Earnings Season Performance Update
- (7:10) – A Look Ahead At Tech Earnings: IBM, TXN. INTC
- (13:50) – Episode Roundup: [email protected]
On today’s episode of the Tech Talk Tuesday podcast, Ryan McQueeney discusses the early days of Q4 earnings season and previews three of the tech sector’s top reports coming this week.
Remember to subscribe and leave a rating on Apple Podcasts if you enjoy the show!
Stocks have rebounded well from their Christmas Eve lows, with most major indexes posting healthy gains in the first few weeks of the year. Exactly how long this rally will last remains to be seen, however. One major uncertainty facing the market is Q4 earnings season, which is ratcheting up this week.
Overall, total earnings for the S&P 500 are expected to grow nearly 11% on a year-over-year basis. Revenues are projected to be just over 5% higher than the prior-year period. This growth is solid no doubt, but it would represent a significant slowdown from EPS growth of 26% and revenue growth of 8% in Q3.
The technology sector is facing one of the fastest decelerations. Earnings in this group are expected to grow 3.8% this quarter, and estimates have come tumbling down following profit warnings from Apple AAPL and a few notable chip suppliers.
Nevertheless, bullish investors will hope that tech can surprise to the upside and inspire a continued New Year rally. We’ll get a good sense of whether that is likely to happen over the next few days, as fresh reports from industry bellwethers IBM IBM, Intel INTC, and Texas Instruments TXN will be delivered.
IBM’s report will be posted after the bell today. The IT giant has struggled to generate consistent revenue growth in recent years, and analysts think this quarter will likely see IBM’s total sales fall once again. Earnings estimates have also trended downward recently, which is never a great trend to see right ahead of a report date. That said, IBM could witness a nice post-earnings move if it can beat expectations.
Chip giants Texas Instruments and Intel will report on Wednesday and Thursday, respectively. Texas Instruments has been battered by semiconductor sector volatility in the past year, and though EPS growth is expected in this report, early estimates for 2019 have the company’s bottom line shrinking. This is an illustration of the “peak-to-trough” process that hits cyclical chip stocks.
For Intel, the story is slightly different. The stock has held up quite well in comparison to many of its peers, and earnings growth for 2019 still looks like it could be in play. Of course, this will depend on what Intel guides for on Thursday afternoon, so we can expect Wall Street to be watching this report closely.
Will the chip companies paint a better picture of the industry’s near future? Can IBM report unexpected revenue growth? What could these reports mean for the broader tech sector? Check out this week’s episode of Tech Talk Tuesday for Ryan’s answers to these questions and more!
If you feel that we missed something, or if you want us to cover a different story, shoot us an email at [email protected]. Make sure to check out all of our other audio content at zacks.com/podcasts, and remember to subscribe and leave us a rating!
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