The Q1 earnings season has heated up with over 100 companies on the S&P 500 index reporting this week. If early indications are anything to go by, the earnings trend so far has more or less confirmed the grim projections, making Q1 the fourth consecutive quarter to report an earnings decline for the benchmark index.
Plagued by a plethora of macroeconomic issues and continued volatility in the equity market, Q1 earnings estimates for the S&P 500 index have gone downhill over the last three months, albeit improving slightly in the last few days. Per the latest Earnings Trend Report, Q1 earnings for the S&P 500 companies are expected to be down 9.7% on a 0.8% decline in revenues. Guidance for most companies that have reported so far has already been lowered to easy-to-beat levels, resulting in better-than-expected positive earnings and revenue surprises.
However, the overall Q1 earnings scenario still remains clouded with uncertainty. What is more alarming is that the likely dismal earnings performance this time is not attributable to the inherent weakness of the Energy sector alone. Rather, downward estimate revisions are expected in almost all the sectors, barring a few. About 10 of the 16 sectors are expected to witness an earnings decline in Q1, with Oil/Energy, Basic Materials, Industrial Products, Aerospace, and Conglomerates being the notable decliners.
Among the Conglomerates slated to report this week, let’s have a sneak peek at two major industrial goods stocks that are scheduled to release their quarterly results on Friday, Apr 22.
General Electric Company GE is scheduled to report first-quarter 2016 earnings before the opening bell tomorrow. During the soon-to-be-reported quarter, General Electric launched a Digital Alliance Program, which is dedicated to build the digital industrial ecosystem across global systems integrators, independent software vendors, telecommunications service providers and technology providers. This industry-pioneering program will likely help General Electric to gain a competitive edge over peers, grow its customer base and generate higher revenues by expanding its IT portfolio. For the impending quarter, General Electric has an Earnings ESP of 0.00%, as both the Most Accurate estimate and the Zacks Consensus Estimate stand at 20 cents. (Read more: Can a Leaner GE Score a Hat Trick with Q1 Earnings Beat?)
Honeywell International Inc. HON will report first-quarter 2016 results before the opening bell tomorrow as well. During the first quarter, Honeywell completed the acquisition of privately held Movilizer, a cloud platform provider for field service applications. Alongside, the company also closed the acquisition of RSI Video Technologies, a provider of intrusion detection systems for commercial and residential security applications, for approximately $123 million. Honeywell is likely to post impressive first-quarter results on the back of these strategic acquisitions. For the first quarter of 2016, this Zacks Rank #2 (Buy) stock has an Earnings ESP of 0.00%. (Read more: What's in Store for Honeywell This Earnings Season?)