The corporate reporting season in the US continues. With the fourth-quarter reporting season now more than three-fourths complete, the analysts now see earnings growth of 16.2% for the quarter.
But first-quarter estimates are less favorable. They show a 0.3% YoY decline, which would mark the first quarter of negative growth since the earnings recession that ended in 2016. The analysts are projecting a 1.9% decline in S&P earnings in the first quarter, followed by increases of 1.1% in the second quarter, 2.4% in the third and 9% in the fourth for overall 2019 EPS growth of 5%.
From the end of 2016 through last December 31, the earnings per share for S&P 500 companies probably rose about 40%. In fact, the companies in the S&P 500 just completed three consecutive quarters of 20%-plus YoY earnings per share growth.
The S&P 500 companies are in a streak of double-digit earnings growth that goes back to the fourth quarter of 2017.
Coca-Cola expects sales revenue to slow down in 2019
Coca-Cola reported higher-than-expected earnings for its fourth quarter, helped by demand for tea, coffee, water, and sports drinks, but the company still expects sales to slow this year. The company said that organic earnings, which do not include currency fluctuations, acquisitions, and asset sales, are likely to grow by about 4% in 2019, compared with a 5% growth last year.
The company’s organic revenue rose by 5% in the fourth quarter compared to a year earlier, helped by better sales of Coca-Cola Zero Sugar and low or non-calorie versions of Sprite and Fanta.
The volume of coffee and tea sales jumped by 3% in the quarter thanks to the growth of Fuze Tea in Europe and the new line of ready-to-drink coffee in Japan. Water and sports drinks rose by 1%. There is a drop of 1% in carbonated beverages, while for fruit juices, dairy, and herbal drinks the drop is 2%.
In the quarter, the volume of carbonated beverages sold in North America declined by 1% due to the surge in prices despite the higher demand for Coca-Cola Zero Sugar and Sprite. The company focuses on larger margins instead of volumes.
Coca-Cola net income fell by 6% to 7.1 billion USD in the quarter on an annual basis as a result of the impact of foreign currencies and other factors.
Cisco Systems surpassed market expectations in the second fiscal quarter
Cisco Systems surpassed market expectations in the second fiscal quarter and gave a bluish forecast for the current quarter, indicating confidence that business will continue to spend on their computer networks. Due to good business performance, the manufacturer increases its quarterly dividend and share buy-back program.
Cisco has made a profit of 2.82 billion USD in the second fiscal quarter after reporting a loss of 8.78 billion USD a year earlier. Without the one-off effects, the earnings per share amounted to 0.73 USD per share.
The company’s revenues jumped to 12.45 billion USD annually. This is the fifth consecutive quarter of growth for Cisco. The company expects adjusted earnings per share of 0.70 to 0.72 USD and revenue from 12.74-12.99 billion USD.
At the same time, the company gave a bullish forecast for the current business.
For the current third quarter, Cisco expects adjusted earnings per share of 0.76 to 0.78 USD with revenue ranging of 12.84-13.21 billion USD.
Nvidia reported sharpest earnings decline
Nvidia reported a 24% drop in quarterly earnings and signaled that additional efforts are needed to shake off the past peak due to the drop of cryptocurrency mining and to revive demand for chips used by video game players and data centers.
This is the first quarterly decline in Nvidia’s earnings on an annual basis for the past five years and the sharpest decline in nearly a decade.
Nvidia reported fourth-quarter fiscal revenue of 2.21 billion USD compared to 2.91 billion USD per year ago. This is largely in line with a 500 million USD reduction, which the company announced a little over two weeks ago when it said video game players are giving up new graphics cards and data center transactions are not strong.
Profit fell by 48% to 567 million USD, highlighting the difficult struggle for a company that was previously a high-tech leader. On a revised basis, the company’s earnings per share amounted to 0.80 USD per share.