- Though earnings expectations are diminished across the board, Comms could be one of the bright spots
- Facebook, Alphabet, and Twitter once again find themselves in the regulatory crosshairs
DISannounced it would be laying off 28,000 employees
When you think about the earnings season straight ahead, it’s important to remember that not all sectors necessarily look equal. Among sectors, the Communication Services arena is one that might stand out as investors await a fresh round of company reports.
Third quarter earnings for the overall market are again expected to be extraordinarily gloomy for many S&P 500 companies overall—though once again with lowered expectations heading into earnings season. Research firm FactSet expects an overall average earnings pullback of 21.8%. That’s certainly better than the near-32% drop in the second quarter, but hardly something to cheer about.
Then there’s the sector-specific market. And among sectors, Communication Services scores high marks from analysts, with 59% offering buy ratings on the sector, according to FactSet. That’s exactly where it stood in January and up a percentage point from May.
The bulk of those buy ratings are in the Communications sector components many Americans rely on normally but have gravitated toward with more focus and attention since the pandemic began. We’re talking about Netflix
And there’s Disney (DIS). More on that in a bit.
Overall, FactSet expects Communication Services earnings per share to fall a little less than the overall market, about 20.5%. But it actually expects slight year-over-year revenue growth (not decline) of 0.2%. In a normal year, that would probably sound pretty weak, but this year, many companies would probably take it.
No More Fangs in FAANG Stocks?
Speaking of FB and GOOGL, communications sector stocks often