Brace for impact 1/28/2019

Brace for impact 

Another earnings season is upon us. This is the time when it’s all about fundamentals driving sharp price adjustments. On average an S&P 500 stock will move ~3.9% on a single day after its earnings report; stock movements for technology companies are more volatile, averaging ~4.8%1. We expect greater than usual price volatility this season. 

For C4Q18, overall Picacio predicts currency negatively impacted the top line of multinational companies by 1.5% to 2%; conversely, currency will be a tailwind for revenues in C1Q19. This earnings season, based on our machinery, around 52% of S&P 500 companies will beat revenue estimates (fewer than usual) and over 80% will beat non-GAAP EPS estimates (more than usual). However, we expect companies to issue cautionary guidance due to economic slowdown and weaning tax reform effect. 

The table shows Picacio’s revenue YoY growth predictions for ten technology segments (based on our advanced proprietary segmentations). While growth remains quite strong in technology, there is expected to be a deceleration in the growth rate of traditional hardware segments, while services segments are anticipated to hold strong. The best performing technology sector is electric cars whilst the worst is the smartphone sector.

  1. 1. All revenue numbers are converted to USD based on average currency rates traded in corresponding quarters. Single-day stock moves are calculated as absolute price movement averaged over eight past quarters.

  2. 2. Includes social networks, search engines, and ad-driven Internet ratio companies.

  3. 3. Includes main Infrastructure as Service providers in the North America, Asia, and Europe.

  4. 4. Includes main global Internet TV service providers.

  5. 5. Includes main Software as Service players offering CRM, payroll, ERP, MIS, HRM, CM, life science, CAD, security, productivity, administrative, publishing, marketing, and finance

  6. 6. Includes main e-commence companies.

  7. 7. Includes main chip manufactures globally.

  8. 8. Includes mostly US-based network equipment manufacturers.

  9. 9. Includes main semiconductor capital equipment manufacturers globally, includes both services and equipment.

  10. 10. Includes publicly-traded game publishers, excludes gaming hardware.

  11. 11. Includes main smartphone vendors globally.