After the first week of earnings, analysts have tempered their expectations for profit growth, anticipating a continuation of the profit-declining trend.
The Week That Was: The blended year-over-year earnings of S&P 500 companies are expected to decrease by 0.4%, marking the fourth consecutive decline, according to Factset's weekly earnings insights report. The decline in earnings is largely due to downward revisions in earnings per share (EPS) estimates for Pfizer, Inc.
Some of the notable disappointments from the past week include Tesla, Inc.
Factset data indicates that out of the 17% of the S&P 500 companies that have reported so far, 73% have reported positive earnings per share (EPS) surprises, and 66% have reported positive revenue surprises.
The Week Ahead: With earnings from the financial sector tapering, tech companies are expected to take the spotlight this week. Investors will closely monitor earnings from communication services companies such as Meta Platforms, Inc.
Piper Sandler analyst Brent Bracelin anticipates Microsoft to guide to a slight improvement in core growth, driven by a non-cloud recovery in the December quarter. KeyBanc Capital Market's Michael Turits expects overall in-line September quarter results from the software giant, exercising caution given the ongoing high-rate environment and macro concerns.
"Large channels we spoke to said they were in line or better relative to their expectations with Azure. C4Q Azure expectations were for similar growth," he added.
For ad-dependent social media companies, the tepid ad-spending environment may present challenges. However, companies like Alphabet have other growth opportunities, including a presence in the cloud market and exposure to AI.
Data from Factset indicates that, among all the S&P sector classes, the communications sector is likely to report the largest year-over-year earnings growth, with Meta leading the charge.
Following the stock pullback in the September quarter, valuations have become compelling for most. Factset reported that the forward 12-month P/E ratio for the S&P 500 is 17.7, below the 5-year average of 18.7 but slightly above the 10-year average of 17.5.
Key earnings to watch for during the week are:
Monday (after the close)
- Agilysys, Inc.
(AGYS ) - Crane Company
(CR ) - Packaging Corporation of America
(PKG ) - Logitech International S.A.
(LOGI )
- 3M Company
(MMM ) - Archer-Daniels-Midland Company
(ADM ) - The Coca-Cola Company
(KO ) - Dow Inc.
(DOW ) - General Electric Company
(GE ) - General Motors Company
(GM ) - Halliburton Company
(HAL ) - PulteGroup, Inc.
(PHM ) - Novartis AG
(NVS ) - Spotify Technology S.A.
(SPOT ) - Verizon Communications Inc.
(VZ ) - Xerox Holdings Corporation
(XRX )
- Alphabet
- Boyd Gaming Corporation
(BYD ) - Microsoft
- Snap
- Texas Instruments Incorporated
(TXN ) - Visa, Inc.
(V )
- General Dynamics Corporation
(GD ) - Norfolk Southern Corporation
(NSC ) - Old Dominion Freight Line, Inc.
(ODFL ) - T-Mobile US, Inc.
(TMUS )
- Canadian Pacific Kansas City Limited
(CP ) - Edwards Lifesciences Corporation
(EW ) - International Business Machines Corporation
(IBM ) - KLA Corporation
(KLAC ) - Mattel, Inc.
(MAT ) - Meta Platforms
- O'Reilly Automotive, Inc.
(ORLY )
- Altria Group, Inc.
(MO ) - Boston Scientific Corporation
(BSX ) - Bristol-Myers Squibb Company
(BMY ) - Comcast Corporation
(CMCSA ) - Hertz Global Holdings, Inc.
(HTZ ) - Hasbro, Inc.
(HAS ) - Mastercard Incorporated
(MA ) - Northrop Grumman Corporation
(NOC ) - Merck & Co., Inc.
(MRK ) - Royal Caribbean Cruises Ltd.
(RCL ) - Southwest Airlines Co.
(LUV ) - STMicroelectronics N.V.
(STM ) - Seagate Technology Holdings plc
(STX )
- Amazon
- Arthur J. Gallagher & Co.
(AJG ) - BJ's Restaurants, Inc.
(BJRI ) - Capital One Financial Corporation
(COF ) - Ford Motor Company
(F ) - Intel Corporation
(INTC ) - SkyWest, Inc.
(SKYW )
- Colgate-Palmolive Company
(CL ) - Sanofi
(SNY ) - Exxon Mobil Corporation
(XOM ) - Charter Communications, Inc.
(CHTR ) - AutoNation, Inc.
(AN )
