Earnings playbook: Your guide to the biggest reports this week, including Netflix and Tesla
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Buckle up. Nearly 70 S & P 500 companies are slated to report earnings this week. Among the biggest reports are Tesla, Netflix and Intel. Investors will also comb through Alaska Air’s latest quarterly update. Thus far, the earnings season has been lackluster. Of the roughly 52 S & P 500 companies that have reported, just 69% have beaten earnings expectations, according to FactSet. Take a look at CNBC Pro’s breakdown of what’s expected from some of this week’s key reports. All times are Eastern. Monday United Airlines is set to report earnings after the bell. A call with management is slated for the following day. Last quarter: UAL shares dropped after the airline warned about expensive fuel and war in the Middle East cutting into profits . This quarter: The airline’s profits are expected to have fallen 30% in the fourth quarter, LSEG data show. What CNBC airlines reporter Leslie Josephs is watching: “All eyes will be on the impact from the Boeing 737 Max 9 grounding when United reports results. The carrier parked its 79 Max 9s after a door panel blew out during an Alaska Airlines flight on Jan. 5, and the FAA will need to approve inspections before the planes can fly again. No one was seriously injured on the incident but United has more of the aircraft than any other single carrier. The accident and subsequent grounding occurred during what is traditionally a low point for travel, but investors will be focused on how much this will hurt United’s revenue going forward, since not all affected passengers could be accommodated on other jets. Investors will also look closely at United’s cost outlook going forward as it adjusts to higher salaries.” What history shows: Bespoke Investment Group data shows United beats earnings expectations 70% of the time. However, the stock averages a 1% decline on earnings day, including a 9.7% drop following the company’s Q3 release. Tuesday Procter & Gamble is set to report earnings before the bell, followed by a call at 8:30 a.m. Last quarter: PG beat earnings and revenue estimates despite an uptick in prices . This quarter: Analysts on average expect single-digit earnings and revenue growth for the consumer giant’s fiscal second quarter, according to LSEG. What CNBC is watching: Procter & Gamble is coming off back-to-back lackluster years, falling 3.3% in 2023 and 7.4% in 2022. Can this latest report point to signs the consumer giant is regaining its mojo? Here’s what Evercore ISI analyst Robert Ottenstein said earlier this month: “Procter faces headwinds, not the structural issues that brought [Trian’s Nelson Peltz] to the board. Two headwinds — slowing category growth in the U.S., China turmoil — don’t equate to concerns over pricing power or innovation whose benefits didn’t resonate with consumers.” He added there are two positives for Procter going forward: 1) emerging markets could be a source for growth, and 2) “Supply chain savings provide earnings flex (180 bps) and a revenue opportunity as slow-moving [inventory] get trimmed.” What history shows: Procter beats earnings expectations 84% of the time, per Bespoke. Shares have also risen more than 2% in each of the last three earnings days. Netflix is set to report earnings after the bell. A call with corporate leadership is slated for 4:45 p.m. Last quarter: NFLX beat earnings expectations as ad-supported subscriptions rose . This quarter: Analysts forecast a major year-over-year upturn in earnings per share for the streaming giant, per LSEG. What CNBC is watching: The big question for Netflix heading into this report is whether the streaming giant can maintain the momentum generated from the company’s paid login-sharing and ad-supported tier initiatives. Loop Capital’s Alan Gould raised his price target to $535 from $500, noting: “The rationalization of the streaming industry is starting and NFLX’s dominance is becoming even clearer. As the traditional studios pivot their strategy from profit to growth, not only is the competition raising subscription prices and reducing content spend, but they are again licensing content to NFLX — even DIS and HBO.” What history shows: Bespoke data shows Netflix exceeds earnings estimates 81% of the time. However, the stock can be volatile on earnings days. It rallied 16% on the company’s third-quarter results, but fell 8.4% after Netflix posted its second-quarter figures. Wednesday IBM is set to report earnings after the close, with a conference call slated for 5 p.m. Last quarter: IBM reported an 8% increase in software sales, which drove better-than-expected earnings and revenue . This quarter: The legacy tech giant is expected to report single-digit year-over-year earnings and revenue growth, according to LSEG. What CNBC tech reporter Jordan Novet is watching: “Some analysts are skeptical about IBM’s goal of $10.5 billion in free cash flow for 2023. But they’re eager for new details on the company’s progress in selling clients on artificial intelligence products. Evercore ISI upgraded its rating on the stock to the equivalent of buy, noting that ‘we think IBM is an overlooked beneficiary of increasing AI adoption.’ Investors will be listening for commentary about growth prospects in software and consulting in 2024.” What history shows: IBM shares have risen in three of the last four earnings days. Bespoke data also shows the company beats earnings expectations 83% of the time. Tesla is set to report earnings after the close, followed by a call at 5:30 p.m. Last quarter: TSLA reported earnings and revenue that missed expectations , sending shares lower. This quarter: LSEG data show analysts expect a big earnings per share drop from the year-earlier period. What CNBC is watching: Tesla comes into this week’s report limping, with shares down 14.6% so far in 2024. That decline comes as the EV maker cuts prices in Europe and China , while CEO Elon Musk pushes for even more control of the company . “Elon Musk just opened a can of worms by threatening to develop AI expertise outside Tesla unless his current c.13% voting stake is raised to 25%,” wrote Jefferies analyst Philippe Houchois, who has a hold rating on the stock. “Still, we assume the most likely outcome will be another CEO Super-compensation scheme to keep AI developments in the Tesla fold, maintaining governance as a stock overhang.” What history shows: Tesla shares have fallen more than 9% for three straight earnings days, Bespoke data shows. Thursday Alaska Air Group is set to report earnings in the premarket, with a conference call set to happen at 11:30 a.m. Last quarter: ALK posted third-quarter earnings and revenue that came in below analysts’ expectations. This quarter: Analysts are forecasting a massive earnings drop for the airline, while revenue is expected to grow slightly year over year, LSEG data shows. What CNBC airlines reporter Leslie Josephs is watching: “Alaska Airlines is still grappling with the fallout from a door plug that blew out from one of its nearly-new Boeing 737 Max 9 planes earlier this month. Executives will spell out the financial damage and potential compensation from Boeing from the grounding, which began hours after the accident occurred. There might be some details executives can’t offer about the specifics of the accident since the airline is a party in the federal investigation of Flight 1282, but they will likely explain to investors just how many bookings it has lost and how much it has had to compensate travelers for canceled flights from the grounded jets — which make up about a fifth of its fleet. Both United and Alaska’s forecasts will provide some clues about just how much the latest issue, seemingly a manufacturing flaw, will affect Boeing. The manufacturer reports the following week, on Jan. 31.” What history shows: Bespoke data shows Alaska Air tops bottom-line estimate 72% of the time. However, shares have fallen for three straight earnings days. Intel is set to report earnings after the closing bell. A call with management is scheduled for 5 p.m. Last quarter: INTC reported earnings that beat expectations along with strong guidance . This quarter: The chipmaker’s earnings per share are expected to have jumped sharply from the year-earlier period, per LSEG. What CNBC is watching: Intel is coming into this quarterly report with some momentum. Shares are up 8% since the company announced a new AI chip to compete with Nvidia and AMD. The stock has also surged more than 60% over the past 12 months. As for the fourth-quarter numbers, UBS analyst Timothy Arcuri thinks the results will be above the guidance midpoint thanks to a strong PC market. However, he sees “downside to March Q guidance for both revenue and EPS. We see revenue guided down in the range of 10% Q/Q (inline with a normal March Q but far below Street which is down ~5% Q/Q) with gross margin coming down to 43.5% (~150bps below Street).” What history shows: IBM tops earnings expectations 78 of the time, according to Bespoke. Shares have also done well over the last three earnings days, rising 4%, 6.6% and 9.3%, respectively.
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