Earnings Preview: Costco, FedEx, and Oracle Set to Surprise Investors

Costco, FedEx, and Oracle are in the spotlight as Zacks Investment Research releases its earnings preview for the upcoming quarter. With mixed results from these industry giants, investors are keenly watching for potential surprises in their earnings reports.

Key Takeaways

• Costco narrowly missed revenue expectations but exceeded earnings estimates.
• FedEx's recent report showed disappointing results, contrasting with Oracle's impressive performance.
• Overall, Q3 earnings for the S&P 500 are projected to rise by 3.34% compared to last year.

Costco's Earnings Report

Costco's recent quarterly earnings report revealed a mixed bag for investors. While the company reported a 6.1% increase in earnings, it narrowly missed revenue expectations. The results showed:

• Earnings Growth: +6.1%
• Revenue Growth: +1%
• Comparable Same-Store Sales: +5.3% in the U.S. and +5.5% in Canada

Despite the modest revenue miss, Costco continues to thrive in a challenging consumer spending environment, outperforming many of its peers. The company has seen double-digit gains in discretionary categories such as jewelry and furniture, alongside a robust 19.5% increase in digital sales.

However, the stock's premium valuation, trading at 50.8 times forward earnings estimates, has led to a pullback in shares following the report. Investors are cautious, as the results, while solid, were not flawless.

FedEx's Disappointing Results

In stark contrast to Costco, FedEx's recent earnings report was disappointing. The company faced challenges that have raised concerns among investors. Key points include:

• Earnings Decline: FedEx's earnings fell short of expectations, reflecting ongoing operational challenges.
• Market Reaction: The disappointing results have led to a decline in FedEx's stock price, raising questions about its future performance.

Oracle's Impressive Performance

Oracle, on the other hand, delivered an impressive earnings report, showcasing strong growth and resilience in the tech sector. Highlights include:

• Earnings Growth: Oracle reported significant earnings growth, exceeding market expectations.
• Revenue Growth: The company also saw a notable increase in revenues, reinforcing its position in the tech industry.

Overall Earnings Landscape

As of now, 14 S&P 500 companies have reported their Q3 earnings, with a total earnings increase of 26.8% compared to the same period last year. Key statistics include:

• Earnings Beats: 71.4% of companies beat EPS estimates.
• Revenue Beats: 78.6% exceeded revenue estimates.

Looking ahead, the overall Q3 earnings for the S&P 500 are expected to rise by 3.34% year-over-year, with revenues increasing by 4.5%. This follows a strong earnings growth of 10% in the previous quarter.

Sector-Specific Insights

The earnings revisions trend has shown a notable decline, particularly affecting 14 out of 16 Zacks sectors. The Transportation, Energy, Business Services, and Aerospace sectors have experienced the most significant cuts in earnings estimates. In contrast, the Tech and Finance sectors have seen modest increases.

Conclusion

As the earnings season unfolds, investors are closely monitoring the results from Costco, FedEx, and Oracle. While Costco and Oracle show resilience, FedEx's struggles highlight the challenges within the logistics sector. The overall earnings landscape suggests cautious optimism, with expectations for continued growth in the coming quarters.

Sources

• Costco, FedEx and Oracle are part of Zacks Earnings Preview, Yahoo Finance.