US companies have barely managed to achieve a positive increase in earnings so far this season of quarterly results, but the big test comes next week.
Nearly a quarter of the S&P 500 SPX,
is set to report results, with those companies accounting for 39% of the market value index, according to calculations based on FactSet data. Given that the S&P 500 is weighted by market capitalization, this list of companies will have an oversized impact on the profit trajectory for the index.
Earnings are expected to decline for the fourth consecutive quarter, as all results are recent, but those companies that have reported so far have exceeded total expectations.
The FactSet consensus now models a 5% drop in earnings for the index, compared to the 6.3% drop projected a week ago. If profit growth for the S&P 500 eventually ends positively, it would mark the end of the current earnings recession, which occurs when corporate profits fall for two or more consecutive quarters.
Apple Inc. AAPL,
and Facebook Inc. FB,
are among the highlights of next week’s adulthood, along with Tesla Inc. TSLA,
which will deliver results for the first time since becoming a member of the S&P 500. All three companies are scheduled to report on Wednesday afternoon and are expected to have record revenues in the holiday quarter.
The holiday neighborhood is always crucial for Apple, which launches new iPhones in the fall. With a slightly later launch than usual this year, due to the pandemic that pushed sales during this period, Apple is expected to record the highest quarterly revenue of all time and its first total of over $ 100 billion. The tech giant also continued to see benefits from distance work and distance school trends, which led to strong iPad and Mac sales during the COVID-19 crisis.
Full preview: get ready for Apple’s first $ 100 billion quarter
Facebook is also expected to post what should easily be a record quarter, given the strong trends in digital advertising over the holidays. However, the company will face questions about user involvement and a decision to ban Donald Trump from the platform indefinitely about his role in inciting violent violence in the US Chapter. Bernstein analyst Mark Shmulik points to “continued fatigue of use” on social networks, as well as a “distorted conversation towards non-monetizable political events.”
Full preview: Facebook earnings still flourish amid pandemic, economic slowdown and antitrust control
Tesla has already revealed full-year delivery numbers that have exceeded analysts’ expectations, and all eyes will be on the company’s prospects for 2021. RBC Capital Markets analyst Joseph Spak anticipates a delivery forecast of 825,000 to 875,000 million units for year-round, even though chief executive Elon Musk said at Tesla’s latest earnings call that an analyst was “not far away” because he expected 840,000 to a million deliveries in 2021.
Full preview: Can Tesla’s sales growth match the stock’s growth?
Here’s what to watch next week, which reports on 117 members of the DJIA S&P 500 and 13 Dow Jones Industrial Average,
component.
Up in the air
BA Boeing Co.,
the journey remains turbulent even though the company’s 737-MAX aircraft have been recertified after being grounded for almost two years. Although the company has begun delivering these aircraft, “the delivery rate of the 450 737-MAX parked vehicles will be dictated by the airline’s ability to absorb aircraft as well as the demand for air traffic,” according to Benchmark Company analyst Josh Sullivan .
Wednesday morning’s Boeing report will provide insight into the company’s pandemic recovery expectations, although Sullivan sees future volatility as a result of a recent stock offering and the impact of the COVID-19 crisis on airlines.
US quarterly quarterly reports have been bleak so far, and American Airlines Group Inc. AAL,
and Southwest Airlines Co. LUV,
offers several Thursday mornings.
Can you hear me now?
Verizon Communications Inc. VZ,
leads a telecommunications revenue week on Tuesday morning, followed by AT&T Inc. T,
Wednesday morning and Comcast Corp. CMCSA,
Thursday morning.
For wireless operators, a key issue will be the impact of iPhone 12 promotions on recent results. Investors will also be looking for information on a recent spectrum of wireless bidding, which will be crucial for 5G network implementations. Although the bids have not yet been made public, the auction has led to record spending, and AT&T and Verizon should have paid handsomely to assert their position. The question for investors is what impact these offers will have on the financial positioning of companies.
Full preview: AT&T gains to start defining year for telecom giant
AT&T and Comcast have a higher media exposure than Verizon, and the two companies have tried to fight the new realities caused by the pandemic. Both companies have made moves to further emphasize the transmission with their film lines, given the closure of the theater, and the financial implications of these moves will be worth watching.
Paying
The evolving situation of the pandemic is reflected perhaps no more clearly than in the results of Visa Inc. V,
Mastercard Inc. ME,
and American Express Co. AXP,
which have a boost on the global landscape of consumer spending. Companies should provide information on the recovery of travel towards the end of the year, as well as the impact of recent blockages.
Susquehanna analyst James Friedman recently wrote that his $ 3.97 billion Mastercard revenue projection is a little out of consensus, although he asked, “Does anyone really care about the fourth quarter of 2020?” Friedman is optimistic about mobile payments and the dynamics of online shopping suggesting “positive trends for the future” for Mastercard, which reports on Thursday morning. Visa follows that afternoon, while American Express begins the week with its report on Tuesday morning.
The chip saga continues
Advanced Micro Devices Inc. I HAVE D,
is ready to continue to benefit from INTC Intel Corp.,
stumbles, which analysts expect to last for some time, even as Intel prepares for a new technology-oriented CEO to take the lead.
“We have little confidence that Intel will be able to close this transistor gap quickly, and therefore we expect it to continue to lose ground for the foreseeable future,” Jefferies analyst Mark Lipacis wrote after Intel’s latest revenue report. AMD will show how this dynamic played on its side of the equation when it publishes numbers on Tuesday afternoon.
Full preview: If Intel does its job, can AMD maintain a bloated rating?
Other chip makers reporting next week include Texas Instruments Inc. TXN,
Tuesday afternoon; Xilinx Inc. XLNX,
to be acquired by AMD in its report on Wednesday afternoon, when it will be joined by chip equipment manufacturer Lam Research Corp. LRCX,
; and Western Digital Corp. WDC,
Thursday afternoon.
Busy week for the Dow
Of the 13 members of DJIA Industrial Dow Jones,
set to report this week are 3M Co MMM,
, Johnson & Johnson JNJ,
American Express, Verizon and Microsoft Corp. MSFT,
all this reports on Tuesday.
“In the short term, we see reading the company’s COVID-19 vaccine as a key future catalyst and we believe that efficacy in the 80% + range would suggest a clear role for the product in the market,” wrote JP Morgan analyst Chris Schott of Johnson & Johnson.
Analyst Cowen & Co. J. Derrick Wood sees tough comparisons for Microsoft, especially in its Azure and server business, although he expects a more favorable situation in the future.
Full preview: The SolarWinds hack may actually be a good thing for Microsoft
Wednesday brings results from Boeing and Apple, while on Thursday McDonald’s Corp. appears. MCD,
Dow Inc. DOW,
and Visa. Honeywell International Inc. HON,
Chevron Corp. CLC,
and Caterpillar Inc. HOW,
we round the week Friday morning.