Q2 Earnings Season Scorecard and Analyst Reports for Mastercard & Others

Thursday, July 14, 2022

The Zacks Research Daily presents the best research output of our analyst team. Today's Research Daily features an update on the Q2 earnings seaosn and new research reports on 16 major stocks, including Mastercard Incorporated (MA), Linde plc (LIN) and Chubb Limited (CB). These research reports have been hand-picked from the roughly 70 reports published by our analyst team today.

You can see all of today’s research reports here >>>

Q2 Earnings Season Scorecard

Including this morning's JPMorgan JPM and Morgan Stanely MS, we now have Q2 results from 25 S&P 500 members. Total Q2 earnings for these 25 index members are down -3.4% from the same period last year on +10.6% higher revenues, with 68% beating EPS estimates and 64% beating revenue estimates.

It is still early in the Q2 reporting cycle, but the 68% EPS beats percentage and 64% revenue beats percentage for this group of 25 index members is below what we had seen from this group of companies in other recent periods and is towards the lower end of the 5-year range.

JPMorgan and Morgan Stanley provided a shaky start to the Q2 reporting cycle for the Finance sector, with both missing top- and bottom-line estimates. Total Q2 earnings for the sector companies that have reported are down -26.7% from the same period last year on -2.4% lower revenues, with only 33.3% beating EPS and revenue estimates (only one out of the three banks that reported today beat estimates). For more details about the Q2 earnings estimates and evolving expectations for the second half and beyond, please check out our weekly Earnings Trends report >>>> Q2 Earnings Season Gets Underway

Today's Featured Analyst Reports

Mastercard shares have declined -16.7% over the past year against the Zacks Financial Transaction Services industry’s decline of -34.2%. The Zacks analyst has flagged headwinds like the impact of rising operating expenses on margins and the revenue impact of high rebates and incentives as reasons to be cautious.

However, Its profit levels are rising thanks to increasing consumer spending. Numerous acquisitions are helping it to grow addressable markets and drive new revenue streams. The COVID-19 crisis accelerated the use of electronic payments with much greater adoption of digital and contactless solutions. The situation provides an opportunity for Mastercard's business to expedite its shift to digital mode.

Its focus on the Southeast Asia and LatAm markets is expected to intensify. The company is well-poised to gain from steady cash-generating abilities. A strong capital position allows the firm to pursue acquisitions and deploy capital.

(You can read the full research report on Master Card here >>>)

Linde shares have declined -9.1% over the past year against the S&P 500 index's -13.2% decline. While the company remains vulnerable to negative macroeconomic developments, it has done a reasonably commendable job in navigating inflationary pressures and supply-chain challenges.

Its primary products in industrial gases include oxygen, which is used as life support in hospitals. Linde’s process gas, like hydrogen, is being utilized for clean fuels, while its high-purity and specialty gases are employed to manufacture electronics.

Linde has long-term contracts with on-site customers backed by minimum purchase requirements, thereby securing stable cashflows. Recently, the firm reported strong first-quarter results, thanks to increased prices and volumes from electronics and chemicals end markets.

(You can read the full research report on Linde here >>>)

Chubb shares have outperformed the Zacks Insurance - Property and Casualty industry over the past year (+16.3% vs. -6.0%). The Zacks analyst believes that the company benefits from a suite of compelling products as well as services. Its inorganic growth story helps it to achieve a higher long-term ROE.

Chubb boasts a strong capital position, with sufficient cash generation capabilities. It focuses on capitalizing on the potential of middle-market businesses. Several distribution agreements have expanded its network, boosting market presence. It made investments in various strategic initiatives that paved the way for long-term growth.

Strong capital position helps it boost shareholder value. Given the rise in interest rate, it expects adjusted investment income for the second quarter of 2022 to be $915 to $925 million. However, exposure to cat loss induces volatility in underwriting results. Elevated expenses weigh on operating income.

(You can read the full research report on Chubb here >>>)

Other noteworthy reports we are featuring today include Waste Management, Inc. (WM), América Móvil, S.A.B. de C.V. (AMX), and Airbnb, Inc. (ABNB).

Sheraz Mian
 
Director of Research

Note: Sheraz Mian heads the Zacks Equity Research department and is a well-regarded expert of aggregate earnings. He is frequently quoted in the print and electronic media and publishes the weekly Earnings Trends and Earnings Preview reports. If you want an email notification each time Sheraz publishes a new article, please click here>>>

Today's Must Read

Accretive Buyouts, Strong Balance Sheet Aid Mastercard (MA)

Linde's (LIN) Contracts With Minimum Volume Requirements Aid

Chubb (CB) Continues to Gain From Strategic Acquisitions

Featured Reports

Differentiation Ups Waste Management (WM) Despite Low Capital
The Zacks analyst is positive about Waste Management's core operating initiatives targeting differentiation and continuous improvement. However, low current ratio is a headwind.

America Movil (AMX) Benefits from Higher Subscriber Base
Per the Zacks analyst, America Movil's performance is gaining from growing subscriber base. However, higher comprehensive financing costs was a drag on the overall performance.

Airbnb (ABNB) Banks on Strong Nights & Experiences Bookings
Per the Zacks analyst, strengthening gross nights booked in non-urban areas, and recovery in both long-distance and cross-border travel are benefiting Airbnb's Nights & Experience bookings.

Biogen's (BIIB) Upcoming Product Launches May Revive Growth
The Zacks analyst says that potential new product launches like lecanemab, zuranolone and additional biosimilars can help revive growth at Biogen, which is facing multiple challenges at present.

Steady Investment & Renewable Focus Aid Eversource (ES)
Per the Zacks analyst, Eversource's investment of $18.1 billion within 2022-2026 time period will boost clean electricity generation, fortify its infrastructure and increase reliability of its service

Digital Transformation Driving Demand For CDW's Products
Per the Zacks analyst, CDW is gaining from solid product and solutions portfolio that enable remote working and operations continuity plan. High debt load and stiff competition remain concerns.

Buyouts Aid Genuine Parts (GPC), High Costs & Debt Hurt
The Kaman Distribution buyout has bolstered Genuine Parts' market-leading position of North American industrial platform. But, soaring costs and rising debt play spoilsports, per the Zacks analyst.

New Upgrades

CrowdStrike (CRWD) Rides on Product Strength, Acquisitions
Per the Zacks analyst, CrowdStrike is gaining from solid contributions of its growth-oriented products, primarily Falcon platform. Also, strategic buyouts like SecureCircle and Humio are a positive.

Cheniere Partners (CQP) to Benefit From Growing LNG Demand
Per the Zacks analyst, Cheniere Partners (CQP) is well-poised to capitalize on the rising LNG demand, which is expected to significantly increase over the next decade.

Lamb Weston's (LW) Top Line Gains From Solid Pricing Actions
Per the Zacks analyst, Lamb Weston's top line has been gaining from its robust pricing. In the third quarter, price/mix rose 12%, mainly reflecting gains from pricing actions to counter inflation.

New Downgrades

Higher Rates & Supply-Chain Woes Play Spoilsport for MDC
Per the Zacks analyst, MDC may witness lower demand given rising interest rates, continued supply chain disruptions that are affecting affordability of the prospective buyers.

Rising Mortgage Rates & Input Costs to Hurt PulteGroup (PHM)
Per the Zacks analyst, rising mortgage rates and home prices may lead to lower demand for homes, thereby impacting PulteGroup's profitability.

Rising Net Outflows, Escalating Expenses Hurt Franklin (BEN)
Per the Zacks analyst, rise in net outflows will hurt Franklin's (BEN) assets under management growth. Also, rising costs due to technology investments might keep the bottom line under pressure.

Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
 
Mastercard Incorporated (MA) : Free Stock Analysis Report
 
America Movil, S.A.B. de C.V. (AMX) : Free Stock Analysis Report
 
Chubb Limited (CB) : Free Stock Analysis Report
 
Waste Management, Inc. (WM) : Free Stock Analysis Report
 
Linde plc (LIN) : Free Stock Analysis Report
 
Airbnb, Inc. (ABNB) : Free Stock Analysis Report
 
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