Two Dow components from the extremely important technology and finance industries — Intel (INTC) and JPMorgan Chase (JPM) — reported Q3 earnings after the closing bell Tuesday. Intel beat expectations on both top and bottom lines, while JPMorgan missed estimates on both quarterly sales and earnings.
Intel posted earnings of 64 cents on revenues of $14.47 billion i the quarter, easily surpassing Zacks consensus estimates of 59 cents and $14.23 billion, respectively. The chip giant has spent much of the past several quarters claiming space in the cloud-based solutions industry, where the company now conducts 90 percent of its business. PC shipments were down 11 percent, unsurprisingly, and data center revenues of $4.1 billion were a tad short of expectations, but overall this was a sound beat for Intel.
Q3 2015 is also the 5th straight quarter posting a positive earnings surprise, as Intel continues its dominance in the cloud space among top-tier tech firms. That said, it's been a difficult year in the market for INTC, with its stock plummeting in the broad sell-off in August, only to rebound more than 20 percent since. Following the Q3 earnings report, INTC shares were barely up upon the announcement, and have since slipped into negative territory.
On the conference call at the top of the hour, we look for Intel to proclaim that its roughest times are now behind it. With guidance in-line with expectations for Q4 and a solid earnings improvement quarter over quarter (64 cents compared to 55 cents in Q2), Intel should be able to at least carry forward its current Zacks Rank #3 (Hold).
JPMorgan, reporting after the closing bell for the first time in recent memory, posted $1.32 in earnings per share on $23.54 billion in revenues for its Q3. These numbers missed the Zacks consensus estimates of $1.38 and $23.8 billion, respectively, and the revenue estimate already demonstrated a big drop in year-over-year sales.
No doubt falling commodity prices and weaker Chinese economic growth put a dent into results of one of the biggest of the "too big to fail" financial firms on Wall Street. Looking forward to the conference call coming up, it will be interesting to see if the misses came from lower principal trading and fixed income trading levels — JPMorgan's two biggest aspects of its overall business — or if there is something else in play.
Analysts had been hacking away at EPS estimates, pushing downward estimate revisions for this quarter, next quarter, fiscal 2015 and fiscal 2016. JPMorgan retains a Zacks Rank #3 at this moment, mostly because of a couple upgrades for 2016 projections. Listeners to the call will be waiting to hear what the loan growth numbers for Q3 were, and until the Fed raises interest rates and the global economy picks up, we can probably expect similar Q3 performance out of upcoming earnings reports from other big banks like Wells Fargo (WFC).
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