With big tech earnings scheduled for next week, investors are no doubt excited. And after their sideways action over the past three months, market participants are curious whether Q3 results can help continue the rally through year-end.
Thank you for reading this post, don't forget to subscribe!Two mega-cap names on the docket include Meta Platform META and Alphabet GOOGL. But how do expectations stack up for each respective company? Let’s take a closer look, also focusing on advertising revenue.
meta platform
Analysts are positive for the quarter to be released, with the $3.57 Zacks Consensus EPS estimate 6% higher than July. The expected figure represents a huge increase of 120% year-on-year.
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Top line expectations also rose, with the quarterly estimate of $33.4 billion up 2.5% from the same period and representing a 20% improvement from the year-ago period.
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Advertising revenue is important to the company, representing a significant portion of total sales. For the upcoming release, the Zacks Consensus Estimate for advertising revenue is $32.9 billion, representing a notable 20% increase year-over-year.
The expected increase is especially notable given fears of an economic recession, as advertising spending is typically one of the first items cut among businesses. As we can see below, META has consistently surpassed consensus advertising revenue expectations recently, with the most recent beat totaling 4.2%.
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Furthermore, the company’s valuations appear to be spot on given the projected growth, with earnings projected to climb 36% on 12% higher revenue in the current year. Shares currently trade at a 23.4X forward earnings multiple (F1), which is in line with the 23.1X five-year average.
Alphabet
Analysts have shown similar positivity for Alphabet’s upcoming release, with the $1.45 Zacks Consensus EPS estimate 1.4% higher since July. The expected figure represents solid growth of 36% from the year-ago quarter.
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And regarding the top line, expectations have risen modestly, with a quarterly revenue estimate of $63.1 billion reflecting a fractional increase of 0.5% since July and a 10% improvement from sales of $57.3 billion a year earlier.
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Alphabet’s advertising business also accounts for a large portion of its total revenue. For the quarter, the Zacks Consensus Estimate for advertising revenue is $58.9 billion, representing an 8% change year-over-year.
As shown below, the company has consistently delivered positive surprises on this metric recently. Again, these expectations and recent results don’t necessarily reflect a meaningful slowdown in ad spending.
Image Source: Zacks Investment Research
ground level
With big tech earnings coming next week, it’s sure to be a busy period for investors.
And, of course, many eyes will be on Alphabet’s GOOGL and Meta Platform’s META quarterly results, with both companies projected to post big earnings growth on improved revenue.
Overall tech sector profitability has recently improved, reflecting successful cost-cutting measures following a challenging environment in 2022. These developments are reflected in the forecast earnings growth rates that both companies are expected to post.
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Source: finance.yahoo.com
