Q3 Earnings Preview: Key Insights on Meta Platforms and Apple
This past week marked a significant uptick in earnings reports, particularly from technology companies. The overall outlook for Q3 looks strong, buoyed by stellar performances from leaders in the sector.
Next week will feature several members of the Magnificent 7 on the earnings roster, including Meta Platforms (META) and Apple (AAPL).
Stay informed on quarterly earnings: Check the Zacks Earnings Calendar.
The Magnificent 7 is projected to achieve 16.2% earnings growth, accompanied by a 13.6% rise in sales, as illustrated in the chart below.
Image Source: Zacks Investment Research
Let’s delve into the specific expectations for Meta Platforms and Apple.
META has performed remarkably well in 2024, standing out as one of the strongest members of the Magnificent 7. While shares of some other companies have remained stagnant, investor optimism for META has been evident as it approaches its earnings announcement.
The Zacks Consensus EPS estimate for this quarter stands at $5.17, marking an increase of 2% since August and indicating 18% year-over-year growth. Positive revisions to earnings estimates have boosted its Zacks Rank to #2 (Buy).
Image Source: Zacks Investment Research
Revenue estimates are also promising, with a projected 17% increase compared to last year. A key focus will be on the company’s advertising performance, which has greatly benefitted from advancements in AI capabilities.
Historically, META has exceeded consensus expectations consistently, recording six consecutive positive surprises in its advertising results.
Image Source: Zacks Investment Research
Investors can look forward to insights on META’s AI initiatives, particularly regarding capital expenditures. The stock’s current valuation, at 23.7 times forward earnings, is relatively close to its five-year median of 22.1, and notably beneath its five-year peak of 31.5.
The PEG ratio sits at 1.2, in line with historical trends and significantly below the five-year high of 2.9.
Apple’s Focus on AI Innovations
In contrast to META, Apple’s expectations show some bearishness following recent downward revisions. The Zacks Consensus EPS estimate for Apple is $1.54, projecting a 5% increase year-over-year.
Image Source: Zacks Investment Research
One significant aspect of Apple’s report will be its iPhone performance, traditionally a crucial focus for investors. Anticipation surrounds the new iPhone 16 and the AI capabilities Apple has been promoting.
In two of the last three quarters, iPhone results have surpassed expectations, indicating potential positive outcomes for the upcoming reports.
Image Source: Zacks Investment Research
However, Apple’s current valuation suggests caution, with a forward earnings multiple of 30.3, exceeding the five-year median of 26.3 but below the peak of 36.1. The PEG ratio of 2.4 also sits above the historical median of 2.2. Despite these factors, investor confidence in Apple remains strong due to its robust fundamentals.
Bottom Line
Next week will see key earnings reports from notable companies like Apple (AAPL) and Meta Platforms (META), marking the kickoff of the broader Magnificent 7 earnings cycle.
Attention should be on META’s insights regarding capital expenditures and advertising outcomes, while Apple’s iPhone results and AI discussions are expected to be highlighted.
Discover 7 Top Stocks for the Coming Month
We have identified 7 elite stocks from a pool of 220 Zacks Rank #1 Strong Buys. Experts believe these selections are poised for significant price increases.
Since 1988, this set has outperformed the market by more than 2X, averaging a gain of +23.7% annually. Be sure to look closely at these handpicked stocks.
See them now >>
For the latest insights from Zacks Investment Research, you can also download “5 Stocks Set to Double” for free.
Apple Inc. (AAPL): Free Stock Analysis Report
Meta Platforms, Inc. (META): Free Stock Analysis Report
To read this article on Zacks.com click here.
Zacks Investment Research
The views and opinions expressed herein are those of the author and do not necessarily reflect those of Nasdaq, Inc.
