Q2 Earnings Season Scorecard and Research Reports for JNJ, Pioneer Natural & Others
Thursday, August 3, 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 Johnson & Johnson (JNJ), General Dynamics Corporation (GD) and Pioneer Natural Resources Company (PXD). 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 of this morning's results, we now have Q2 results from 394 S&P 500 members or 78.8% of the index's membership.
Total Q2 earnings for these 394 index members are down -11.8% from the same period last year on flat revenues (actually down -0.01%) from the year-earlier level, with 79.7% beating EPS estimates and 66% beating revenue estimates.
Excluding the Energy sector drag where Q2 earnings and revenues are down -50.5% and -28% from the year-earlier levels, respectively, the earnings and revenue growth pace for the rest of the S&P 500 index would be -5% and +4.8%, respectively.
As we have noted all along since the start of this reporting cycle, the Q2 EPS beats percentage is tracking notably above what we had seen from this group in recent quarters as well as historically. This is significant since Q2 estimates had fallen less than was the case ahead of other recent quarters.
We are seeing a similar revisions trend at play for the current period (2023 Q3), with estimates holding up essentially unchanged since the start of the quarter. This is particulalry so on an ex-Energy basis.
In fact, the aggregate ex-Energy earnings total for the rest of the S&P 500 index is a hair up since June 27th, with Tech, Autos, Construction, Utilities and Transportation enjoying positive estimate revisions.
For complete coverage of the Q2 earnings season, please check out our weekly Earnings Trends report here >>>> Earnings Estimates Reflect Stabilization
Today's Featured Analyst Reports
Shares of Johnson & Johnson have gained +2.0% over the past year against the Zacks Large Cap Pharmaceuticals industry’s gain of +16.0%. The company’s Pharma unit is performing at above-market levels. Growth in 2023 is expected to be driven by existing products like Darzalex, Tremfya, Erleada, Invega Sustenna and Uptravi, and also continued uptake of new launches, including Spravato, Carvykti and Tecvayli.
The MedTech unit is showing improving trends driven by recovery in surgical procedures and contribution from new products. J&J is making rapid progress with its pipeline and line extensions.
However, headwinds like generic competition and pricing pressure continue. Though J&J has taken meaningful steps to resolve its talc and opioid litigation, uncertainty exists regarding the talc litigations.
(You can read the full research report on Johnson & Johnson here >>>)
General Dynamics shares have outperformed the Zacks Aerospace - Defense industry over the past year (+0.5% vs. -2.3%). The company’s product innovation strategy should strengthen its footprint in the business jet market significantly. General Dynamics expects to begin G800 customer deliveries in 2023 and G400 deliveries in 2025.
General Dynamics has a solid solvency position. An impressive backlog of $87.63 billion at the second quarter end indicates the solid demand for the company’s products. Yet, supply-chain issues continue to pose risks for its Marine Systems’ submarine programs in 2023.
The geopolitical uncertainty prevalent worldwide may impact the company’s financial performance. Any decrease in U.S. government spending may impact General Dynamics financial results
(You can read the full research report on General Dynamics here >>>)
Shares of Pioneer Natural Resources have outperformed the Zacks Oil and Gas - Exploration and Production - United States industry over the past year (+19.5% vs. +12.7%). Divestment of its Delaware Basin assets has established itself as the only large-cap exploration and production pure play in the Midland Basin. This has enhanced its production outlook, as reflected in the upstream player’s higher year-over-year projection for 2023 oil equivalent volumes.
In fact, higher oil-equivalent production volumes led to the firm’s better-than-expected quarterly earnings. Pioneer’s exposure to debt capital has consistently been lower than the composite stocks belonging to the industry over the past few years. It is also engaging in wind and solar projects to increase use of renewable energy and reduce Scope 2 emissions.
However, Pioneer has been bearing the brunt of increasing oil and gas production expenses for the past few quarters. Also, it is highly exposed to oil & gas price volatility.
(You can read the full research report on Pioneer Natural Resources here >>>)
Other noteworthy reports we are featuring today include Alibaba Group Holding Limited (BABA), Aflac Incorporated (AFL) and Autodesk, Inc. (ADSK).
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
J&J (JNJ) Pharma and MedTech Unit to Drive Growth
Order Flow Aids General Dynamics (GD) Amid Supply Challenges
Pioneer's (PXD) Focus on Prolific Permian Basin Assets Aid
Featured Reports
Solid Sales in U.S. Segment Aid Revenues at Aflac (AFL)
Per the Zacks analyst, Aflac's U.S. segment, backed by increased growth investments and productivity gains, will fuel growth. A strong solvency position enables business investments.
Autodesk (ADSK) Rides on Shift to Subscription Services
Per the Zacks analyst, Autodesk's focus on selling more subscription-based services is helping the company generate stable revenues and higher margins.
Lots Buyout Strategies Aid D.R. Horton (DHI), High Costs Ail
Per the Zacks analyst, solid acquisition strategies, increased homebuilding lots and decreasing cycle times aid D.R. Horton. However, high costs and interest rates hurt growth.
OTIS Banks on New Equipment Backlog Amid Currency Woes
Per the Zacks analyst, Otis has been gaining from strong New Equipment's adjusted backlog and operational improvements. However, currency headwinds hurt.
KDG Buyout Aids Genuine Parts (GPC) Amid Cost Woes
While the Kaman Distribution Group buyout has strengthened Genuine Parts' industrial business, the Zacks analyst is concerned of high SG&A costs which are limiting margins.
Tyson Foods (TSN) Gains From Protein Demand Amid Cost Woes
Per the Zacks analyst, Tyson Foods has been gaining on favorable demand for protein amid high input costs. The USDA projects fiscal 2023 domestic protein production to increase from fiscal 2022 level.
PTC's Performance Benefits from Diversified Product Portfolio
Per the Zacks analyst, PTC's performance is being driven by robust demand for products like Creo and Windchill and strategic acquisitions. However, stiff competition is a headwind.
New Upgrades
Wholesale & Cloud Businesses Momentum Aids Alibaba (BABA)
Per the Zacks analyst, growing international commerce retail businesses are benefiting Alibaba's top-line growth. Further, expanding cloud business is contributing well to its top line.
Product Diversification, Rate Hike Aid Arch Capital (ACGL)
Per the Zacks analyst, Arch Capital is set to grow on rate increases and growth in existing accounts. Global operations and compelling product portfolio provides diversification and earnings stability
Energizer (ENR) Gains From Pricing & Productivity Actions
Per the Zacks analyst, Energizer has been gaining from its solid pricing power amid cost inflation. Its efforts to drive productivity by optimizing manufacturing footprint has been proving beneficial.
New Downgrades
Labor Costs, Poor Financials Hurt Spirit AeroSystems (SPR)
Per the Zacks analyst, labor and supply-chain cost growth on the B787 program as well as forward loss related to these might hurt Spirit AeroSystems. It also boasts a weak financial position
Rising Costs, Poor Asset Quality Hurt Ally Financial (ALLY)
Per the Zacks analyst, elevated costs due to Ally Financial's efforts to launch products and grow inorganically will hurt profits. Deteriorating asset quality due to rising provisions is another woe.
Escalating Investment in Headcount Hurt FTI Consulting (FCN)
Per the Zacks analyst, escalating investments in hiring highly qualified professionals as well as promoting and training individuals, increases costs and weighs on FTI Consulting' bottom-line growth.
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General Dynamics Corporation (GD) : Free Stock Analysis Report
Johnson & Johnson (JNJ) : Free Stock Analysis Report
Pioneer Natural Resources Company (PXD) : Free Stock Analysis Report
Aflac Incorporated (AFL) : Free Stock Analysis Report
Autodesk, Inc. (ADSK) : Free Stock Analysis Report
Alibaba Group Holding Limited (BABA) : Free Stock Analysis Report
