Friday, January 26, 2018
Ahead of the opening bell for the final trading day of this week, new U.S. Gross Domestic Product (GDP) figures were released, and, while not exactly disappointing, came up short of what many analysts had been expecting. The first read for Q4 GDP reached 2.6%, lower than the consensus estimate of 2.9%.
Should this figure remain unchanged through future revisions — the second read is expected February 28 — this would amount to domestic economic growth of roughly 2.6%. This is nothing to sneeze at; in fact, it is almost exactly the average GDP growth rate of the previous 5 years. It’s a level which has brought the U.S. from the edge of the abyss during the Great Recession all the way to current all-time highs in the major stock market indexes.
That said, the 30 basis-point miss does come as a bit of a surprise, especially considering a very strong Retail industry over the holiday shopping season, as well as a recovery in Oil & Gas and Construction and Manufacturing — all of which served as albatrosses in previous years. Indeed, some analysts were expecting a positive surprise for Q4 GDP that would have pushed the December quarter to 3% growth three times in a row for the first time this decade.
This may yet happen, of course — future GDP reads have the benefit of more data points over time, and should this information break more to the positive, we could indeed see the most robust U.S. economy since the Recession. In particular, we look toward adjustments to private inventory investment, which shook out at 2.5% in Q4; personal consumption expenditures of 2.8% were the highest we’ve seen in a couple years.
Q4 Earnings Roll On
We finish the week as we began it — with a new batch of Q4 earnings results. Overall we’ve enjoyed a very strong earnings season, with positive surprises far outweighing negative ones. Even better: earnings revisions in future quarters for companies already having reported are currently up double-digits for the first time in many quarters, according to Zacks Director of Research Sheraz Mian.
Industrial giant Honeywell HON beat earnings estimates by a penny to $1.85 per share. Revenues of $10.84 billion outpaced the $10.69 billion in the Zacks consensus. Fiscal year earnings guidance was ratcheted up to a range of $7.75-8.00 from a previous guide of $7.55-7.80. For more on HON’s earnings, click here.
Defense contractor Rockwell Collins COL posted fiscal Q1 2018 earnings of $1.59 per share, ahead of the $1.53 expected. Revenues also outperformed estimates to $2.01 billion from the $1.99 billion estimate, which were also up 9% year over year. Tax reform added a one-time 37 cents per share to the company’s bottom line. For more on COL’s earnings, click here.
Biotech company AbbVie ABBV is up 3% in today’s pre-market on an earnings beat of $1.48 per share from $1.44 expected, on quarterly sales of $7.7 billion which eked out a positive surprise over the $7.6 billion in the Zacks consensus. Drug titles Imbruvica and Humira led the way to gains in the company’s Q4. Guidance is way up to $7.33-7.43 per share; the Zacks consensus had been for $6.58 per share. For more on ABBV’s earnings, click here.
Mark Vickery
Senior Editor
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