With company earnings season back underway, we profile the firms updating the market with their Q3 results over the next month or so, and identify what to watch out for during the announcements.
14-18 October: US banking earnings, PayPal, eBay
US banking heavyweights dominate the week, with companies including JPMorgan, Wells Fargo, Citigroup, Bank of America and Morgan Stanley all posting Q3 earnings results.
Expectations are that JPMorgan results will include earnings per share of $2.45, up 5% year-on-year, while Wells Fargo is set to forecast $1.14 a share, a less than 1% gain. Citigroup’s earnings look to be the best of the bunch, with an expected $1.95, up a hefty 13%.
Analysts expect Bank of America to post a near 25% decline, with earnings $0.5 a share, and Morgan Stanley is expected to post $1.13, a 3% drop, during their company earnings announcement.
Citigroup's expected EPS gain year-over-year
PayPal earnings come out on 17 October, and things are not looking great. The online payment provider has said it expects a $177 million loss on strategic investments for this quarter’s results. The expected impact is at least a $0.15 decline in earnings per share, which are pegged at $0.68. eBay, a company once synonymous with PayPal, reports later in the week and is looking at earnings of $0.64 per share, up 14.3% as its resurgence continues.
Spotlight: Netflix results
What they're reporting
Q3 company earnings results
When they’re reporting
Why investors should care: Netflix’s share price dived in July after posting its first loss in nearly a decade last quarter. Weighing on the share price was a slowdown in subscriber growth, despite international expansion increasing overall numbers. A growing number of rival services, including offerings from Disney and Apple, has meant Netflix has been unable to claw back July’s losses.
Key metric to watch
Netflix might have posted an earnings beat last quarter, but earnings were still down 29.4% from the previous quarter. Expectations are for Netflix's earnings to grow 16.9% in Q3 year-on-year, coming in at $1.04 per share.
21-25 October: Internet stocks, AMD, Intel and Tesla’s company results
Internet stocks Amazon, Twitter and Shopify are all reporting on 24 October. Amazon's company earnings underwhelmed last quarter, and it looks like Q3 could similarly be disappointing. Wall Street’s consensus figure is $4.57, a steep 20% drop.
Shopify, which has been taking market share from Amazon, is expected to post earnings of $0.11 a share, up 175% from the same period last year. Twitter is forecast to deliver earnings of $0.2 a share. Growth in the active user base will be the metric to watch for both these stocks.
Also going head-to-head this week are chip makers AMD an Intel. First out the blocks is AMD's earnings on 23 October, with earnings forecast around $0.18 a share. Intel reports the next day, and is expected to post earnings of $1.24 a share. Just how much AMD continues to take CPU business from the formerly unassailable Intel will have a bearing on both share prices.
Shopify's expected EPS gain year-over-year
Tesla which is also reporting this week has seen non-GAAP profit margins head in the wrong direction since hitting 25.8% in Q3 2018. How the electric vehicle manufacturer responds will go a long way toward quelling fears that the company’s expansion plans are hurting profitability. Right now forecasts are for earnings of - $0.41, a huge 114% decline.
UK banks begin reporting midweek with Metrobank on 23 October, RBS on 24 October and Barclays on 25 October.
28 October - 1 November: FAANGS, UK banks, and BP company earnings
Alphabet's (Google’s parent company) earnings kick off the week on 28 October, followed by fellow FAANG stocks Facebook and Apple on 30 and 31 October respectively.
Alphabet increased revenue by 19% to 39.94 billion year-on-year last quarter thanks to mobile search, YouTube, and Google Cloud. These remain the key metrics, with Wall Street expecting earnings of $12.45 a share.
Analysts expect Facebook's revenue to increase 26.5% year on year, with earnings to come in at $1.91 a share, up from $1.76 this time last year. In the previous quarter, Facebook reported revenue growth had accelerated and expectations are for a slight cooling off in Q3. Signs that revenue growth is steady could play out in Facebook’s share price.
In Apple’s Q4 earnings announcement, iPhone sales will be pored over as the tech giant tries to get sales back on track after 3 straight quarters of losses for its smartphones. Forecasts are for earnings of $2.83, down from the $2.91 seen in the same quarter last year.
UK banks Lloyds, Standard Chartered and HSBC also update the market this week. With the UK due to leave the EU on 31 October, banking stocks could be volatile and analysts will be expecting an update on how prepared banks are for Brexit.
Among energy stocks, BP has already said it will have to pay 50% of its earnings in tax in Q3, which come out 29 October so look for BP’s share price to move. Exxonmobil earnings will then follow on 1 November. In its latest SEC filing report, Exxon said cumulative profits for 3Q19 would be 50% lower year-on-year.
4-8 November: Disney and UK supermarkets report quarterly earnings
Disney reports Q4 numbers this week and JPMorgan analyst Alexia Quadrani has already slashed her estimate for the stock by 10 cents to $0.95. Quadrani cited Disney+ costs and the Fox acquisition. It seems that other analysts agree with Quadrani, with the average estimate at $0.95, down from $1.05 the year before.
Disney's EPS estimate
Closer to home, M&S’s Q3 results are out 6 November, followed by Sainsbury’s the next day. M&S’s share price is down 45% this year, and 60% over a 5-year timeframe as profits continue to fall. Any signs that it is tackling the problem might cheer investors. Shareholders will be hoping that Sainsbury's Q3 earnings announcement goes better than last quarter when a profit warning was issued. Both stocks have continued to feel the bite of discounters and Aldi and Lidle.
Other big announcements this week include electric car manufacturer Nio on 5 November, payment provider Square on 6 November and Activision on 7 November.