What Can Be Deduced From The 8 Tech Giants' Latest Quarterly Results?

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 |  Includes: AAPL, FB, GOOG, GOOGL, IBM, INTC, MSFT, ORCL, QCOM
by: Arie Goren

Summary

All 8 top S&P 500 tech stocks have already reported their latest quarterly results.

5 companies (AAPL, MSFT, FB, QCOM and INTC) among the 8 top S&P 500 tech stocks have shown better-than-expected results.

The relatively cheap prices of stocks like AAPL, INTC, MSFT, QCOM and GOOG, GOOGL, provide an opportunity to initiate or add to positions in these stocks.

According to Zacks, as of April 25, 240 S&P 500 members have already reported results. Earnings for these companies are up 2.0% from the same period last year, with a 'beat ratio' of 67.2% and a median surprise of +3.1%. Total revenues are up +3.7%, with a revenue 'beat ratio' of 47.3%. However, in this article, I want to focus on the financial results of the top, by market cap, S&P 500 tech stocks.

All eight top S&P 500 tech stocks have already reported their latest quarterly results. A summary of the financial results of these companies is shown in the tables below.

Rank

Ticker

Name

Last Price

Market Cap $million

Industry

1

(NASDAQ:AAPL)

Apple Inc

571.94

492,866

Computers & Peripherals

2

(NASDAQ:GOOG),(NASDAQ:GOOGL)

Google Inc

516.18

348,144

Internet Software & Services

3

(NASDAQ:MSFT)

Microsoft Corp

39.91

329,657

Software

4

(NYSE:IBM)

International Business Machines Corp

189.63

199,944

IT Services

5

(NYSE:ORCL)

Oracle Corp

39.45

176,854

Software

6

(NASDAQ:FB)

Facebook Inc

57.71

146,987

Internet Software & Services

7

(NASDAQ:QCOM)

QUALCOMM Inc.

77.61

130,850

Communications Equipment

8

(NASDAQ:INTC)

Intel Corp

26.26

130,565

Semiconductors & Semiconductor Equipment

Click to enlarge

Click to enlarge

Source: Portfolio123

Revenues

The average quarterly revenue growth from the same quarter last year was at 11.45%, but without Facebook (FB), which increased its sales 71.6%, the average revenue growth was only 2.86%. IBM (IBM) and Microsoft (MSFT) have even shown a negative sales growth. This is compared with an average of 3.7% revenue growth of the 240 S&P 500 members that have already reported results.

Earnings

The average quarterly earnings per share growth were at 22.85%, but without Facebook, which increased its EPS 177.8%, the average revenue growth was only 1.86%. IBM, Microsoft and Intel (INTC) have even shown a negative EPS growth. This compared with an average of 2.0% EPS growth of the 240 S&P 500 members that have already reported results.

Earnings Surprise

The average earnings surprise, calculated by the ratio of actual EPS to the mean consensus, was at 6.61%. Without Facebook, which showed a 29.55% earnings surprise, the average surprise was only 3.33%. IBM, Oracle (ORCL) and Google (GOOG, GOOGL) have even shown a negative surprise. This is compared with an average of a 3.1% earnings surprise of the 240 S&P 500 members that have already reported results.

Price Change since Reports

The average price change since the reports of the eight top S&P 500 tech stocks was negative, at -1.46%. Only Apple (AAPL) has had a significant price increase of 8.99% since reporting. Google's stock has lost 7.25%, and even Facebook, which showed the highest surprise, has seen a 5.95% decline in its stock price. As we all know, the market is not reacting directly to the past figures, but is looking into the companies' future prospects.

Growth

The average annual earnings growth for the past five years, the average annual sales growth for the past five years, and the average annual earnings growth estimates for the next five years, are shown in the table below.

Source: Portfolio123

Analysts expect an annual average of about 15% EPS growth for the next five years for the eight top S&P 500 tech stocks. While it is less than the average annual EPS growth in the past five years, which was about 24%, it is still a decent growth.

Conclusion

Five companies (AAPL, MSFT, FB, QCOM and INTC), among the eight top S&P 500 tech stocks, have shown better-than-expected results, some of them by a big margin. Most companies gave also a very positive outlook. Although the market is not enthusiastic about the results, as shown by the price movement of the companies' stocks, I think the technology sector is healthy and will continue to grow at a decent rate. The improvement in the PC business, the mobile revolution, and the extremely strong growth in the demand for smartphones in emerging markets should be main catalysts for the continuous growth of the tech sector. I still remain bullish on the tech sector, and I recommend investors to take advantage of the relatively cheap prices of stocks like AAPL, INTC, MSFT, QCOM and GOOG, GOOGL to initiate or add to positions in these stocks.

Disclosure: I am long AAPL, MSFT, INTC, GOOG, QCOM. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.