Earnings

Q3 company earnings season: will Amazon, Twitter, Shopify and UK banking share prices climb?

Q3 earnings season continues with quarterly updates from major US tech firms and UK banks this week.

In the US, Amazon [AMZN], Twitter [TWTR] and Shopify [SHOP] share prices are all likely to see movement when the respective companies update the market. Rival chipmakers AMD [AMD] and Intel [INTC] also release earnings this week against the background of a cooling in the US-China trade war.

In the UK, Barclays [BARC] and RBS [RBS] share prices climbed last week on expectations that a Boris Johnson would secure a Brexit deal. After the weekend’s rough and tumble in Westminster, both banks results are now a must-watch.

 

AMD

When they’re reporting

23 October

Why investors should care

AMD's share price has recently gained on a wave of trader optimism. Driving the gains are a possible cooling in the US-China trade war - AMD does 30% of its business there - and growing laptop sales. News that Microsoft will use AMD's Ryzen chip its 15-inch Surface laptop has also caught the eyes of investors.

Key metric

Earnings per share

Analyst expectations/outlook

Expectations are for earnings to jump 47.92% to $0.18 a share. AMD, however, is cautious, with its $1.8 billion revenue guidance well below the $1.95 billion Wall Street has forecast. Any negative news coming from the results might cause traders to hit the sell button, especially as the stock carries an expensive price to earnings multiple of 60x. 

 

 

Amazon

When are they reporting

October 24

Why should traders care

Amazon's share price dropped sharply last quarter after earnings results underwhelmed. Growth in its cloud-computing business slowed to 37% in Q2 - its first sub-40% growth rate since Amazon began reporting AWS numbers.  Expectations are for more of the same, with a year-on-year decline in earnings despite higher revenues.

Key metric to watch

AWS earnings growth

Analyst expectations/outlook

Wall Street expects Amazon to deliver earnings of $4.6 a share, down from last year's $5.75. Expectations are for revenue of 68.79 billion, up 21.6%. Yet, it’s worth remembering that Amazon has beaten analyst forecasts in 3 out of the past four quarters.

 

 

 

Twitter

When they’re reporting

24 October

Why traders should care

Twitter has been spending money this year. First of all its been upgrading how it monitors malicious behaviour on its platforms. And, not to be outdone by the likes of Amazon, the social media platform been buying up streaming rights to high profile sports events. Both of which could weigh on revenues this quarter.

Key metric to watch

Monthly active users

Analyst expectations/outlook

On Zacks Consensus Estimates, analysts expect Q3 revenue to grow 15.6% - slower than the 18% growth seen in Q1 and Q2. Earnings are also expected to drop 4.8% to $0.2 a share. However, with Twitter’s share price trading off its 52-week high, now could be the time to buy considering full-year earnings are expected to soar 186% year-on-year.

 

 

 

Shopify

When they’re reporting

24 October

Why traders should care

Shopify's share price is up 128% this year as it continues to steal market share from Amazon. Bolt-ons like Shopify Payments have only helped to increase the number of small businesses on the platform, boost retention and drive revenue.

Key metric to watch

Full-year guidance

Analyst expectations/outlook

Analysts expect earnings to come in at $0.11 a share, up from $0.04 last year. Expectations are for a significant jump in revenue at $384.51 million, up 42.2%. Seeking Alpha is speculating that Shopify could raise its full year guidance in the earnings announcement. If this happens, expect Shopify’s share price to jump.

 

 

 

Intel

When they’re reporting

24 October

Why traders should care

Intel has seen weak revenues since the third quarter of last year. Hurting sales has been the US-China trade war and a loss of ground to rivals like AMD and Nvidia. However, the company has hiked its dividend payout four years running, and currently carries a 4.56% forward yield.

Key metric to watch

Total revenue

Analyst expectations/outlook

Expectations are for earnings of $1.24 a share, down from last year's $1.4. Intel's stock is trading below its 52-week moving average and could climb if results beat expectations. A forward price to earnings multiple of 10.07x is cheaper than both rival AMD and Nvidia.

 

 

 

RBS

When they’re reporting

24 October

Why traders should care

RBS's share price is flat this year as Brexit fears have left traders undecided on the stock. Yet, turning heads has been Jefferies decision to upgrade the bank to Buy and 418p price target. Hitting this would represent a huge 75% upside. Backing Jefferies decision is an expected jump in mortgage loans in Q4.

Key metric to watch

Mortgage sales

Analyst expectations/outlook

RBS saw its share price steadily climb last week on the news that Boris Johnson could secure a Brexit deal. While the weekend's events have added uncertainty over what’s going to happen come 31 October, a decent set of results should see RBS’s share price climb.

 

 

 

Barclays

When they’re reporting

25 October

Why traders should care

Like RBS, Barclays share price climbed last week on hopes Boris Johnson could clinch a Brexit deal. This week promises to be another wild ride in Westminster, which will have repercussions for Barclays' share price. Yet Barclay’s does a lot of business overseas, and it will be interesting to see if this diversification has insulated it from the uncertainty surrounding the British economy.

Key metric to watch

Corporate and Investment bank earnings

Analyst expectations/outlook

Barclays look set to post pre-tax profits of £714 million from its Corporate and Investment bank operations. Much to the annoyance of activist investor Edward Bramson who has been pushing for change in Barclays investment business since taking a 5.5% stake in the bank. Signs that this area of the business is now heading in the right direction is likely to be welcomed by shareholders.

 

 

 

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