U.S. companies have so far barely managed to pull off positive earnings growth, but the big test comes in the coming week.
Nearly a quarter of the S&P 500 SPX,
according to the calculations based on FactSet data, the results are reported, with 39% of the index according to market value. As the S&P 500 is weighted by market capitalization, this roster of companies will have an extraordinary impact on the profit track for the index.
Earnings for the fourth consecutive quarter are expected to decline once the results for the most recent period are reached, but the companies that have reported so far have beaten expectations together.
The FactSet consensus now models a 5% earnings index for the index, compared to the 6.3% drop forecast a week ago. If profit growth for the S&P 500 ends up positive, it will put an end to the current revenue recession, which occurs when corporate profits fall for two or more consecutive quarters.
Apple Inc. AAPL,
and Facebook Inc. FB,
is among the highlights of the week next week, along with Tesla Inc. TSLA,
yielding results for the first time since becoming a member of the S&P 500. All three of the high-profile businesses will report on Wednesday afternoon and are expected to deliver record revenue in the holiday quarter.
The holiday season is always crucial for Apple, which releases new iPhones in the fall. With a slightly later launch than usual this year due to the pandemic that pushes sales in the period, Apple is expected to achieve its largest quarterly revenue ever and its first total ever above $ 100 billion. The technology giant has likely also continued to see benefits from the developments in distance and distance learning, which have driven strong sales of iPad and Mac throughout the COVID-19 crisis.
Full preview: Get ready for Apple’s first $ 100 billion quarter in history
Facebook is also expected to post a record quarter, given strong digital advertising trends over the holidays. Yet the company will face questions about user involvement and a decision to ban Donald Trump indefinitely from the platform over his role in inciting the violent riot at the U.S. Capitol. Bernstein’s analyst Mark Shmulik points to ‘continued fatigue’ on social media, as well as a ‘conversation that has been skewed towards political casualties.’
Full preview: Facebook earnings continue to thrive amid pandemic, economic slowdown and monopolistic investigation
Tesla has released full-year delivery figures ahead of analysts’ expectations, and all eyes will be on the company’s 2021 outlook. Joseph Spak, RBC Capital Markets analyst, forecasts a delivery forecast of 825,000 to 875,000 million units for the full year. even though CEO Elon Musk said on Tesla’s last earnings call that an analyst “is not far off” because he expected 840,000 to one million deliveries by 2021.
Full preview: Can Tesla’s sales growth match the rise in inventory?
Here’s what to look for in the coming week, with reports from 117 members of the S&P 500 and 13 Dow Jones Industrial Average DJIA,
component.
In the air
BAs from Boeing Co.
the journey remains turbulent, even though the company’s 737 MAX jets have been reaffirmed after being grounded for almost two years. Although the company has begun delivering these aircraft, “the rate of delivery of all 450 parked 737-MAXs will be determined by the airlines’ ability to absorb aircraft as well as the demand for air traffic,” according to Josh Sullivan, analyst. of the Benchmark Company.
Boeing’s report from Wednesday morning offers perspective on the company’s recovery expectations amid the pandemic, although Sullivan predicts volatility due to a recent share offering and the impact of the COVID-19 crisis on airlines.
U.S. airlines’ reports in the fourth quarter have been bleak so far, and American Airlines Group Inc., AAL,
and Southwest Airlines Co. LUV,
offers more on Thursday morning.
Can you hear me now?
Verizon Communications Inc. VZ,
leads a busy week of telecommunications earnings Tuesday morning, followed by AT&T Inc. T,
Wednesday morning and Comcast Corp. CMCSA,
Thursday morning.
For the wireless service providers, the impact of iPhone 12 promotions on recent results is a major issue. Investors will also be looking for information on a recent spectrum of wireless auction offerings that will be crucial to the implementation of 5G networks. Although the offerings have not yet been announced, the auction has increased record spending, and AT&T and Verizon are expected to have both paid well to confirm their position. The question for investors is what impact this bid will have on the financial position of the companies.
Full preview: AT&T earnings will start a defining year for telecommunications giant
AT&T and Comcast have more media exposure than Verizon, and the two companies have tried to fight the new reality brought about by the pandemic. Both companies have moved to emphasize more with their films due to the closure of the theater, and the financial consequences of these moves are worth watching.
Pay
The evolving situation with the pandemic may not be more clearly reflected than in the results of Visa Inc. V,
Mastercard Inc. MA,
and American Express Co. AXP,
which has an impetus to the global consumer spending landscape. The companies should provide insight into the recovery of the trip by the end of the year, as well as the impact of recent closures.
Susquehanna analyst James Friedman recently wrote that his $ 3.97 billion Mastercard revenue projection is slightly below the consensus view, although he also asked, “Does anyone really care about Q4 2020?” Friedman is excited about mobile payments and online shopping dynamics indicating ‘positive trends’ for Mastercard, reported Thursday morning. Visa follows the afternoon, while American Express kicks off the week with its Tuesday morning report.
The chip saga continues
Advanced Micro Devices Inc. AMD,
is ready to continue benefiting from Intel Corp. if INTC,
stumbling, which analysts expect to hold for some time to come, even as Intel prepares for a new technology-oriented CEO to come to the helm.
“We have little confidence that Intel will be able to close the transistor gap quickly, so we expect it to continue to lose a share in the foreseeable future,” Jefferies analyst Mark Lipacis wrote after Intel’s latest earnings report. AMD will show how the dynamics played out on the side of the equation when it posted numbers on Tuesday afternoon.
Full preview: Can Intel maintain a swollen valuation if Intel recovers?
Other chipmakers reporting in the coming week include Texas Instruments Inc. TXN,
Tuesday dinner; Xilinx Inc. XLNX,
which will be reported by AMD on Wednesday afternoon, when disk drive maker Lam Research Corp. LRCX joins in,
; and Western Digital Corp. WDC,
Thursday noon.
Busy week for the Dow
Among the 13 members of the Dow Jones Industrial Average DJIA,
this week is 3M Co MMM,
, Johnson & Johnson JNJ,
American Express, Verizon and Microsoft Corp. MSFT,
which everyone reported Tuesday.
“In the short term, we see the COVID-19 vaccine reading as a major catalyst and believe that efficiency in the 80% + range would represent a clear role for the product in the market,” said Chris Morott, analyst at JP Morgan, written about Johnson & Johnson.
Cowen & Co. analyst J. Derrick Wood sees difficult comparisons for Microsoft, especially in its Azure and server businesses, although he expects a more favorable situation in the future.
Full preview: SolarWinds hack could be a good thing for Microsoft
Wednesday yielded results from Boeing and Apple, while McDonald’s Corp. MCD,
Dow Inc. DOW,
a Visa. Honeywell International Inc. HON,
Chevron Corp. CVX,
and Caterpillar Inc. CAT,
round off the week Friday morning.