Q2 Earnings Season Scorecard and Analyst Reports for Toyota, Deere & Starbucks
Tuesday, July 25, 2023
The Zacks Research Daily presents the best research output of our analyst team. Today's Research Daily features a real-time update on the ongoing Q2 earnings season and new research reports on 16 major stocks, including Toyota Motor Corporation (TM), Deere & Company (DE) and Starbucks Corporation (SBUX). 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 all the results that came out this morning, we now have Q2 results from 122 S&P 500 members or 24.4% of the index's total membership. Total earnings for these 122 index members are up +1.2% from the same period last year on +7.1% higher revenues, with 81.1% beating EPS estimates and 63.9% beating revenue estimates.
The +1.2% earnings growth pace for this group of 122 index members is the first positive year-over-year earnings growth after 5 back-to-back quarters of declines.
The 81.1% EPS beats percentage is not only above what we had seen from this group of 122 S&P 500 members in recent quarters but is also above the 5-year average of 78.7%. This is notable since Q2 estimates had suffered fewer negative revisions relative to other recent quarters.
Looking at Q2 as a whole, combining the actuals that have come out with estimates for the sitll to come companies, total earnings are expected to be down -10.4% from the same period last year on -0.4% lower revenues.
Excluding the Energy sector drag, Q2 earnings for the rest of the S&P 500 index would be down -4.6% on +3.3% higher revenues.
Today's Featured Analyst Reports
Toyota Motor shares have modestly outperformed the Zacks Automotive - Foreign industry over the past year (+7.0% vs. +5.3%). Continued demand for vehicles and robust product line-up is set to fuel sales volumes of Toyota. To capitalize on the accelerated global shift to green cars, the auto giant is deepening focus on manufacturing electric and fuel-cell vehicles, which will bolster the company’s product competitiveness.
The ratio of electrified vehicles sold to total sales in fiscal 2023 was 29.6% and the company expects the ratio to increase to 37% in fiscal 2024. It aims to generate 40% of its global sales from EVs by 2025 and 70% by 2030 and expand global sales of BEVs to 3.5 million units a year by 2030.
The company plans to invest 4 trillion yen ($35 billion) for a line-up of 30 BEV by 2030. Its commitment to return capital to shareholders and upbeat fiscal 2024 view spark confidence. Thus, we are bullish on the stock.
(You can read the full research report on Toyota Motor here >>>)
Shares of Deere have outperformed the Zacks Manufacturing - Farm Equipment industry over the past year (+40.3% vs. +38.1%). The company is witnessing solid growth in order levels, which is expected to aid its top-line performance in the forthcoming quarters. Strong replacement demand will continue to boost the company's results.
Demand for its construction equipment will likely benefit from anticipated growth in infrastructure investments in the United States. Even though inflated material and labor costs are anticipated to impact the company's margins, the company's effort to improve pricing will somewhat help offset this impact. Product launches equipped with the latest technology to make farming automated will continue to provide Deere with an edge over its competitors.
The company is poised to benefit in the long run from rapid growth in the global population and the rising worldwide infrastructure needs. The earnings estimate for 2023 has lately moved north.
(You can read the full research report on Deere here >>>)
Starbucks shares have outperformed the Zacks Retail - Restaurants industry over the past year (+30.7% vs. +23.6%). The company is benefiting from solid comps growth in all its operational segments along with impressive revenue recovery from China after COVID-19.
Improving customer experience with innovative new store designs and upgraded product offerings, and supply-chain efficiencies bode well for the company. Also, the company’s focus on product innovation and store growth adds to its growth. For fiscal 2023, the company expects consolidated revenues and global comparable store sales to be in the range of 10-12% and the high end of 7-9%, respectively, year over year.
However, earnings estimates for fiscal 2023 have moved south in the past 7 days. Increased expenses and inflation are major concerns to the company’s growth trend.
(You can read the full research report on Starbucks here >>>)
Other noteworthy reports we are featuring today include AbbVie Inc. (ABBV), Equinor ASA (EQNR) and DexCom, Inc. (DXCM).
Director of Research
Sheraz Mian
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
Toyota Motor's (TM) Prospects Solid on Electrification Push
Deere (DE) Gains from Strong Demand and Strategic Actions
Store & Comps Growth Aid Starbucks (SBUX), High Cost Ail
Featured Reports
AbbVie's (ABBV) Skyrizi, Rinvoq Key to Long-Term Growth
The Zacks analyst says that AbbVie's new drugs, Skyrizi and Rinvoq, are going strong bolstered by approvals in new indications. They can drive the top-line and make up for lost Humira sales.
Equinor (EQNR) to Benefit From Rising Clean Energy Demand
The Zacks analyst is impressed by Equinor's massive investments in renewable projects, comprising solar and wind energy. With this, the company can capitalize on the rising clean energy demand.
Strong Product Portfolio Aids DexCom (DXCM) Fight Competition
Per the Zacks analyst, DexCom strong product portfolio targeting the large and growing diabetes market is helping the company fight intensifying competition with entry new competing products.
Strong Renewal Rate Change, Retention Aid Travelers (TRV)
Per the Zacks analyst, Travelers is set to gain from continued strong renewal rate change and retention and increase in new business. Yet, exposure to cat loss inducing underwriting volatility ails.
Verisk (VRSK) Gains From Opta Buyout, Operational Risks Stay
Per the Zacks analyst, the Opta acquisition has expanded Verisk's footprint in the Canadian market. Chances of security breach remains as a concern.
Investment Aid Edison International (EIX), Financial Ail
Per the Zacks Analyst, Edison International's systematic capital investment strategy plan is likely to boost its growth in the long-term. However, company's weak financials remains a bottleneck.
Wix.com (WIX) Benefits From Diversified Product Portfolio
Per the Zacks analyst, Wix's performance is gaining from robust uptake of Wix Editor and other new e-commerce applications. Increasing partner revenues and B2B partnerships are tailwinds.
New Upgrades
Robust Live Events Demand Aid Live Nation Entertainment (LYV)
Per the Zacks analyst, Live Nation is likely to benefit from pent-up demand for live events, solid ticket sales and sponsorship business. Also, focus on strengthening of client base bode well.
Expanding Diagnosis & Treatment Portfolio Aids Philips (PHG)
Per the Zacks analyst, Philips continues to benefit from growing Diagnosis & Treatment business on the back of partnerships, expanding geographical coverage and innovative solutions.
Post Holdings (POST) Benefits from Solid Foodservice Segment
Per the Zacks analyst, Post Holdings is benefiting from strength in the Foodservice business. During the second quarter of fiscal 2023, Foodservice sales increased 40.1% to $633.2 million.
New Downgrades
High Costs & Rising Rates Hurt Pool Corp (POOL) Prospects
Per the Zacks analyst, Pool Corp has been negatively impacted by inflationary costs, weather-related constraints and high interest rates. Also fall in new pool construction activity remains a concern.
J.B. Hunt (JBHT) Grapples With Challenging Freight Market
Per the Zacks Analyst, lower revenues across all the business segments, mainly due to a combination of lower volume and customer rates, hurt J.B. Hunt's second-quarter 2023 results.
High Costs & Loan Concentration to Hurt U.S. Bancorp (USB)
Per the Zacks analyst, U.S. Bancorp's high costs due to high integration expenses is likely to limit bottom-line growth. Also, commercial loan concentration are concerning.
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Toyota Motor Corporation (TM) : Free Stock Analysis Report
Starbucks Corporation (SBUX) : Free Stock Analysis Report
Deere & Company (DE) : Free Stock Analysis Report
DexCom, Inc. (DXCM) : Free Stock Analysis Report
AbbVie Inc. (ABBV) : Free Stock Analysis Report
Equinor ASA (EQNR) : Free Stock Analysis Report
