The S&P 500 has formally delivered its worst May return in seven years and second-worst since the 1960s, falling by 6.6%. The companies within the index wiped out 4 trillion USD in market cap during the month. The earnings season is almost over and the corporate results were not on the spotlight, but the economic and political news ruled the markets.
While the first quarter earnings were not stellar, they have topped analysts’ low expectations — especially when compared with results from their overseas counterparts — and are on track to avoid a decline. The earnings recession was imminent, defining that by two or more quarters of flat or negative growth. The consensus of the analysts is for a 2.4% earnings-per-share decline.
With 98% of the companies in the S&P 500 reporting actual results for the quarter, 76% have reported a positive EPS surprise and 59% have reported a positive revenue surprise. The blended earnings decline is -0.4%.
Apparel retailers’ earnings reports haven’t been so disappointing since the Great Recession. The companies ranging from Gap Inc. to J.Jill to Canada Goose and Abercrombie & Fitch delivered disappointing earnings reports in recent days, casting blame for the results on issues such as cool and wet weather, weak traffic at malls, the wrong promotions in stores and overall product missteps.
Apparel retailers’ earnings, as a group, are down 24% for the first quarter of 2019. The group had up until now been growing earnings since the third quarter of 2017. In the first quarter of 2018, apparel retailers’ earnings climbed a whopping 26%.
Meanwhile, S&P 500 earnings yield was 6.05% as of Friday’s close, and the 2nd week in a row where the key benchmark’s earnings yield was above 6%. There was a string of 22 consecutive weeks from October 5th, 2018 to February 22nd, 2019, where every week the S&P 500 earnings yield was above 6% and even above 7% on December 21st, so don’t use the EY as a timing tool, but the metric does indicate that the S&P 500 is relatively cheaper once again.
The S&P 500 earnings yield was between 6% and 7% in 2007 and 2008, but the 2008 Financial Crisis was not an earnings recession, it was a “rotting from within” our mortgage and housing financing, which is not an excuse to disregard the 2007-2008 data, but it’s a real test for today.
HEICO Corp Q2 Earnings Top Estimates
HEICO Corporation reported second-quarter fiscal 2019 earnings of 0.60 USD per share, surpassing the Zacks Consensus Estimate of 0.49 USD. The bottom line rose 36.4% from the prior-year quarter’s figure of 0.44 USD. The year-over-year improvement was driven by higher sales in the reported quarter and a 30% increase in operating income.
Quarterly net sales of 515.6 million USD outpaced the Zacks Consensus Estimate of 478 million USD by 7.9%. The top line also increased by 19.7% from the year-ago quarter’s 430.6 million USD. The upside can be primarily attributed to the company’s organic growth and a favorable impact from the company’s profitable acquisitions.
HEICO Corp’s total costs and expenses increased 17% year over year to 396.5 million USD in the reported quarter. The uptick was due to higher cost of sales and increased selling, general and administrative expenses.
The company’s consolidated operating margin improved to 23.1% in the second quarter of fiscal 2019, up from 21.3% in the second quarter of fiscal 2018.
Dollar General Tops Q1 Earnings and Revenue Estimates
Dollar General came out with quarterly earnings of 1.48 USD per share, beating the consensus estimate of 1.39 USD per share. This compares to earnings of 1.36 USD per share a year ago. These figures are adjusted for non-recurring items.
This quarterly report represents an earnings surprise of 6.47%. A quarter ago, it was expected that this discount retailer would post earnings of 1.88 USD per share when it actually produced earnings of 1.84 USD, delivering a surprise of -2.13%.
Over the last four quarters, the company has surpassed consensus EPS estimates two times.
Dollar General posted revenues of 6.62 billion USD for the quarter that ended April 2019. This compares to year-ago revenues of 6.11 billion USD. The company has topped consensus revenue estimates four times over the last four quarters.
The sustainability of the stock’s immediate price movement based on the recently-released numbers and future earnings expectations will mostly depend on management’s commentary on the earnings call.