Q2 Earnings Season Scorecard and Analyst Reports for TJX Companies, MSCI & Others
Thursday, July 20, 2023
The Zacks Research Daily presents the best research output of our analyst team. In today's Research Daily, we have provided the real-time scorecard on the ongoing Q2 earnings season in addition to featuring updated research reports on 16 major stocks, including The TJX Companies, Inc. (TJX), Simon Property Group, Inc. (SPG) and MSCI Inc. (MSCI). 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 (As of July 20th, 2023)
Including all of this morning's releases, we now have Q2 results from 77 S&P 500 members or 15.4% of the index's total membership. Total earnings for these 77 index members are up +3.6% from the same period last year on +8.4% higher revenues, with 77.9% beating EPS estimates and 63.6% beating revenue estimates.
The +3.6% year-over-year earnings growth is higher than any other period since the last quarter of 2021 for this group of 77 index members. The +8.4% revenue growth compares to +9.3% in 2023 Q1, +7.8% in 2022 Q4, +9.8% each 2022 Q3 and Q2 and +10.2% in 2022 Q1.
The 77.9% EPS beats percentage is the same as was achieved by this group of companies in the preceding period, but higher than the last three quarters of 2022 and about in-line with the 20-quarter average 77.7%.
This would typically not be worth highlighting, but we think it can be interpreted to mean underlying earnings strength since Q2 estimates hadn't fallen as much as had been the case with other recent quarters.
Unlike the EPS beats percentage, the Q2 revenue beats percentage is tracking below what we have become to used to seeing in other recent periods for this group of 77 index members.
Looking at Q2 as a whole, combining the actuals for this group of 77 index members with estimates for the still-to-come companies, total S&P 500 earnings are expected to decline -8.9% from the same period last year on -0.5% lower revenues.
Featured Analyst Reports
TJX Companies shares have outperformed the Zacks Retail - Discount Stores industry over the past year (+36.6% vs. +4.3%). The company’s off-price business model, strategic store locations, impressive brands and fashion products and supply-chain management have been working well.
The TJX Companies is benefiting from its solid store and e-commerce growth efforts. The company’s Marmaxx segment is doing particularly well, wherein comp store sales increased in the first quarter of fiscal 2024, backed by improved customer traffic. The company expects the pretax profit margin to increase in fiscal 2024 and also anticipates overall comp store sales growth.
However, the HomeGoods (U.S.) division has been seeing soft sales. Also, TJX has been grappling with increased wage and supply-chain costs. Management expects these costs to be deterrents in fiscal 2024.
Shares of Simon Property have outperformed the Zacks REIT and Equity Trust - Retail industry over the past year (+26.3% vs. +13.1%). The company is well-poised to benefit from its portfolio of premium assets located in some of the key markets globally. Healthy retail demand has aided leasing activity and occupancy levels.
In June, Simon partnered with Razer to open five RazerStore shops at its properties as the brand continues its experiential retail expansion in 2023. This retail REIT’s efforts to support omnichannel retailing and focus on mixed-use developments are encouraging. Its strategic buyouts, redevelopment efforts and solid liquidity position bode well.
However, higher e-commerce adoption and limited consumers’ willingness to spend amid persistent macroeconomic uncertainty and high interest rates are concerning. While total revenues are expected to improve 2.1% year over year for 2023, funds from operations (FFO) are projected to decline slightly.
(You can read the full research report on Simon Property here >>>)
Shares of MSCI have outperformed the Zacks Business - Software Services industry over the past year (+14.7% vs. +4.9%). The company’s prospects are benefiting from solid growth in recurring subscriptions. It is gaining strong demand for custom and factor index modules, recurring revenue business models, and the growing adoption of its ESG and Climate solutions in the investment process.
MSCI’s expanding portfolio of real asset solutions is noteworthy. Acquisitions have enhanced MSCI’s ability to provide climate-risk assessment and assist investors with climate-risk disclosure requirements. MSCI’s new portfolio foot printing tool has extended climate analysis to municipal bonds and securitized products.
Moreover, strong traction from client segments like wealth management, banks and hedge funds is a positive. However, a leveraged balance sheet are major concerns for MSCI.
(You can read the full research report on MSCI here >>>)
Other noteworthy reports we are featuring today include BCE Inc. (BCE), MPLX LP (MPLX) and Sun Life Financial Inc. (SLF).
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
Online Growth to Fuel TJX Companies (TJX), High Costs a Woe
Healthy Demand, Mixed-Use Assets to Aid Simon Property (SPG)
Solid Adoption of ESG Solution Aids MSCI's (MSCI) Progress
Featured Reports
BCE To Benefit From Growing Demand for PureFibre and 5G
Per the Zacks analyst, BCE will benefit from increased demand for its PureFibre and 5G wireless network. Intense competition and high-debt burden remain concerns.
MPLX's Stable Fee-Based Revenue from Long-Term Contracts Aid
MPLX generates stable revenues from diverse midstream energy assets via long-term contracts. However, declining natural gas processed volumes concerns the Zacks analyst.
Expanding Asia Business Aids Sun Life (SLF), Cost Woes Stay
Per the Zacks analyst, expanding international business and strategic buyouts should poise Sun Life well for growth. However, high expenses put pressure on margins.
Metal Prices Aids Franco-Nevada (FNV) Amid Low Mining Output
Per the Zacks analyst, recent pick-up in gold and silver prices will aid Franco-Nevada's results. However, lower mining activities at certain mines will dent margins.
Capacity Expansion, Cost Reduction to Aid Albemarle (ALB)
While Albemarle faces headwind from higher input costs, it should gain from efforts to boost its global lithium derivative capacity and cost-saving actions, per the Zacks analyst.
HydroChemPSC Buyout Aids Clean Harbors (CLH), Debt High
Per the Zacks analyst, acquisition of HydroChemPSC has generated multiple cross-selling opportunities for Clean Harbors, increasing its scale of operations. A debt-laden balance remains a concern.
CACI International (CACI) Rides on Contract Wins, Buyouts
Per the Zacks analyst, CACI International is benefiting from new contracts supporting IT modernization. Moreover, strategic acquisitions like ID Technologies and SA Photonics bode well for growth.
New Upgrades
Built-to-Order Approach Gives KB Home (KBH) Competitive Edge
The Zacks Analyst stresses that, Built-to-Order process enables homebuyers personalize their homes and also ensure low-cost production, thus giving KB Home competitive advantage over its peers.
NuStar Energy's (NS) Permian Exposure to Spur Growth
The Zacks analyst believes that NuStar's oil pipeline network in the prolific Permian Basin is expected to drive meaningful revenue upside given the region's attractive production growth.
AMERISAFE (AMSF) Rides on Rising Investment Income, No Debt
Per the Zacks analyst, the company's net investment income is driven by growing yields on fixed-income and cash securities. A debt-free balance sheet provides it with ample financial flexibility.
New Downgrades
Regeneron's (REGN) Heavy Reliance on Eylea for Growth, A Woe
Per the Zacks Analyst, Regeneron is overdependent on Eylea for sales growth, as new drugs are yet to gain traction in the market. The regulatory setback for aflibercept 8 mg also hurt the stock.
Weather Variation & Third Party Failure Ail Clearway (CWEN)
Per the Zacks analyst Clearway Energy's (CWEN) power production from renewable asset gets impacted due to adverse weather conditions. Third-party transmission line failure can hurt operation.
Low COVID Test Sales, High Costs Hurt LabCorp's (LH) Profit
The Zacks analyst is worried about LabCorp witnessing huge year-over-year decline COVID-19 testing sales. Mounting costs and expenses are putting pressure on bottom line.
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
Simon Property Group, Inc. (SPG) : Free Stock Analysis Report
The TJX Companies, Inc. (TJX) : Free Stock Analysis Report
BCE, Inc. (BCE) : Free Stock Analysis Report
MSCI Inc (MSCI) : Free Stock Analysis Report
Sun Life Financial Inc. (SLF) : Free Stock Analysis Report
MPLX LP (MPLX) : Free Stock Analysis Report
