Earnings

Q3 earnings season: Will Facebook, Lloyds, Apple and Alibaba's share prices soar?

Q3 company earnings season continues with updates from US tech stocks, UK FTSE 100 stalwarts, and China’s biggest e-commerce company.

In the US, EA [EA], Apple [AAPL] and Facebook’s [FB] share prices have all experienced mixed fortunes over the course of 2019. However, an earnings beat would see any of them enter the final three months of the year with a bang.

Over in the UK, Lloyds [LLOY] and GSK’s [GSK] share prices have both gained over the course of October, despite the uncertainty surrounding the British economy. But with any impact from the spectre of Brexit potentially curtailed by today’s ‘flextension’, could post-earnings turbulence be lessened as a result? 

While in China, Alibaba’s [BABA] share price seems impervious to the ongoing trade war. But will the ‘Amazon of China’s’ Q3 earnings help fuel the gains, or is an upset in store?

 

EA

When they’re reporting

29 October

Why investors should care

Electronic Arts' share price could power up over the festive period with the release of triple-A titles like Need for Speed Heat and Star Wars Jedi: Fallen Order. Investors will be looking for EA’s Q3 earnings to provide updates on its digital business, Fortnite competitor Apex Legends and upcoming pipeline in the run up to Christmas.

Key metric

Digital net bookings

Analyst expectations/outlook

Expectations are for earnings of $0.85 a share in EA’s quarterly earnings, down from last year's $0.88. According to Zacks, EA's share price is the best performing video game stock this year.  EA's price to earnings multiple of 13x is good value, and well below rivals Ubisoft (67x) and Take-Two Interactive (45x). With a strong roster of upcoming games, now could be the time to buy.

 

 

 

Facebook

When they’re reporting

30 October

Why investors should care

Facebook's share price is up 23% this year, as investors continue to like the stock despite the negative PR. Fresh from a congressional grilling to answer questions on crypto-currency Libra, Mark Zuckerberg will be hoping for some good news in Facebook’s Q3 earnings. 

Key metric

Advertising revenue

Analyst expectations/outlook

Deutsche Bank [DB] expects a solid Q3 earnings for Facebook, with advertising revenues to be up 29% compared to the same quarter last year. Among the analysts, the consensus is for earnings of $1.91 a share, up from $1.76. 

 

 

 

Lyft

When they’re reporting

30 October

Why investors should care

Lyft's [LYFT] share price has skidded over 47% since going public in March. Shareholders will be hoping that the ride-sharing app company’s Q3 earnings can get the stock back on track. Lyft has been spending heavily on promotions and driver incentives to steal market share from Uber [UBER]. This could weigh on Lyft's Q3 earnings.

Key metric

Active riders

Analyst expectations/outlook

Zacks expects the number of active riders using Lyft to increase as it continues to gain market share. Lyft itself has forecast revenues of between $900 million and $950 million, up 54-56% from the same quarter last year. However, analysts are expecting revenue to come in at the lower end of guidance, with a consensus of $912.26 million. Earnings per share are forecast at -$1.66.

 

 

 

GSK

When they’re reporting

30 October

Why investors should care

GSK's share price has soared 13% year-on-year as investors continue to back CEO Emma Walmsley's turnaround strategy. Sales for shingles vaccine Shingrix have been strong, with a planned rollout in China. GSK carries a monster forward 4.52% dividend yield and investors will be hoping that strong Q3 earnings keep this on track.

Key metric

Earnings per share

Analyst expectations/outlook

October saw both New Street and Cantor Fitzgerald both upgrade their rating on GSK’s stock to Buy. Expectations are that the British pharma’s immune-inflammation drug sales will see record growth. However, rising competition in respiratory drugs and HIV treatments could weigh on GSK’s Q3 earnings.

 

 

 

Apple

When they’re reporting

30 October

Why investors should care

Apple's share price and earnings used to be driven by iPhone sales. Yet last quarter, iPhone sales dropped 12% as increased competition in the smartphone space ate at Apple’s core business.  The company is now attempting to diversify its business with subscription services like Apple Music. Analysts will be scrutinising take-up of these services in Apple’s earnings update.

Key metric

Subscription service revenues

Analyst expectations/outlook

Wall Street expects Apple's earnings to drop to $2.84 from last year's $2.91. Revenue is forecast to be flat at $62.91 billion.

 

 

 

Lloyds

When they’re reporting

31 October

Why investors should care

Lloyds’ share price has gained 15% since year-to-date. Yet, Citigroup downgraded Lloyds last week citing long-term earnings risks. In their analysis, Citigroup [C] noted that Lloyds’ recent share price bounce makes the risk/reward less attractive.  

Key metric

Net interest margins

Analyst expectations/outlook

Citigroup is expecting net interest rates - a key measure of a bank's profitability - to decrease 3bps in Q3. If this happens, then the share price could take a tumble.

 

 

 

Alibaba

When they’re reporting

1 November

Why investors should care

Alibaba's share price has held strong this year, despite pressure from the US-China trade war. The e-commerce giant has also been increasing its presence in AI and cloud computing. With an ambitious 5-year plan to have 1 billion active users, now could be the time to buy Alibaba stocks.

Key metric

Monthly active users

Analyst expectations/outlook

Last quarter, Alibaba's earnings beat analyst expectations. If it can pull off the same feat, there's no reason Alibaba's share price can't continue to soar. Expectations are for earnings of $1.5 a share, up from the $1.4 seen in the same quarter last year.

 

 

 

Q3 earnings season continues

Q3 earnings season enters the home stretch next week with updates from Nio [NIO], Square [SQ] and Disney [DIS] among others. See who’s worth watching in our full Q3 earnings season preview.

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