To The Moon

The 2024 Q2 earnings season is slowly grinding to a halt, with the majority of $S&P 500(.SPX)$ already delivering quarterly results.

Looking ahead, Q3 earnings for the $S&P 500(.SPX)$ are expected to be up +3.8% from the same period last year on +4.6% higher revenues, chaining together consecutive periods of positivity.

Below is a chart illustrating earnings expectations for the coming and recent periods.

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Several companies have stolen the spotlight throughout the period, including $Meta Platforms, Inc.(META)$ , $Lockheed Martin(LMT)$ and $Eli Lilly(LLY)$ . All three posted robust results and upped guidance, with shares of each seeing bullish activity post earnings.

Let’s take a closer look at each.

$Meta Platforms, Inc.(META)$ Raises AI CapEx

Mega-cap giant Meta Platforms was one of the few Mag 7 members to see a positive reaction to its quarterly results, with the company again exceeding both earnings and revenue expectations. The company’s earnings outlook reflects bullishness across all timeframes. 

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The company delivered a stunning statement in the release, with Mark Zuckerberg saying, ‘We had a strong quarter, and Meta AI is on track to be the most used AI assistant in the world by the end of the year,"

He continued, "We've released the first frontier-level open source AI model, we continue to see good traction with our Ray-Ban Meta AI glasses, and we're driving good growth across our apps."

$Meta Platforms, Inc.(META)$ also raised its CapEx outlook into a band of $37 - $40 billion ($35 - $40 billion prior) to support its artificial intelligence roadmap.

The valuation picture for $Meta Platforms, Inc.(META)$ remains attractive, with the current 22.4X forward 12-month earnings multiple in line with the five-year median and well beneath five-year highs of 31.5X. In addition, the current PEG ratio works out to 1.2X, reflecting that investors are paying a fair price for the forecasted growth.

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$Eli Lilly(LLY)$ Sees Robust Demand

Eli Lilly shares have been red-hot in 2024 thanks to robust results stemming from unrelenting demand, up 65% and widely outperforming relative to the $S&P 500(.SPX)$ . Shares popped following its latest release, with earnings and sales climbing 85% and 35%, respectively.

The company upgraded its current-year sales guidance by a sizable $3 billion. Analysts have adjusted their sales expectations accordingly, with the now $46.4 billion expected alluding to a 35% climb year-over-year.

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The story behind Eli Lilly has been driven by its diabetes drug Mounjaro and its weight loss injection Zepbound, which have seen unrelenting demand among consumers. Mounjaro sales jumped 216% year-over-year, whereas Zepbound sales of $1.2 billion also reflected strong demand.

Earnings expectations have shot higher across the board following the release, with LLY sporting a favorable Zacks Rank #2 (Buy).

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$Lockheed Martin(LMT)$ Generates Significant Cash

$Lockheed Martin(LMT)$ hit all time high on September 3rd, it is the largest defense contractor in the world, operating in defense, space, intelligence, homeland security, and information technology. The company’s steady growth continued throughout its latest period, with EPS and revenue growing 6% and 9%, respectively.

The company has been a long-time favorite among income-focused investors, consistently upping its payout over the years. $Lockheed Martin(LMT)$ ’s cash-generating abilities have aided its dividend growth, with the company posting nearly $1.3 billion in free cash flow throughout its latest period.

Below is a chart illustrating the company’s dividends paid annually over the last 15 years. Please note that the final value illustrated is on a trailing twelve-month basis.

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Bottom Line

The Q2 earnings season overall showed resiliency, with no major spooks hitting the tape. While we saw some mixed reads on the consumer, recent favorable economic data helps alleviate this issue.

And concerning a few companies who stole the spotlight during the reporting period, $Meta Platforms, Inc.(META)$ , $Lockheed Martin(LMT)$ , and $Eli Lilly(LLY)$ all did precisely that.