The market’s focus in the coming week turns toward fourth-quarter earnings. Which are expected to reveal stronger profit growth for economically sensitive stocks compared to technology players.
The earnings period could test a theory that value and cyclicals are set to outperform tech stocks. It will also be a time when investors get a firsthand look at how companies are dealing with inflation. Which rose 7% on an annualized basis during the final month of 2021, as measured by the consumer price index.
Fourth-quarter results season kicks into high gear next week, with overall S&P 500 earnings expected to climb 23.1%, according to Refinitiv IBES. Technology sector earnings are expected to rise by 15.6%, as other groups have benefited more from the economy’s rebound from pandemic lockdowns in 2020.
Tuesday, 18 Jan
The New York-based leading global investment bank Goldman Sachs is expected to report its fourth-quarter earnings of $11.89 per share. This represents a year-over-year decline of about 2% from $12.08 per share seen in the same period a year ago.
The world’s leading investment manager would see a decline in revenue of nearly 1% to $11.65 billion from a year ago. It is worth noting that in the last two years, Goldman Sachs has surpassed market consensus expectations for profit and revenue most of the time.
Goldman Sachs’ revenues grew 22% y-o-y in 2020 to $44.6 billion. It was mainly driven by a 24% y-o-y growth in investment banking and a 43% jump in sales & trading businesses, partially offset by an 11% drop in asset management revenues.
Goldman Sachs Q4 2021 adjusted earnings per share are expected to be $10.81 per Trefis analysis. Almost 8% below the consensus estimate of $11.73. The bank had a strong run in 2020, with its adjusted net income increasing by 13% y-o-y to $8.9 billion.
Silvergate Capital Corporation
The company’s next earnings report is expected to be released on January 18, 2022.
When the Earnings ESP comes up negative, investors should note that this will reduce the predictive power of the metric. But, a negative value is not indicative of a stock’s earnings miss.
The selling appears to be overdone, as analysts’ consensus estimates are calling for fourth-quarter revenue of $52.7 million, which would represent year-over-year growth of more than 94%. Profits are also expected to shine, with earnings per share growing 53%. If Silvergate succeeds in topping those expectations, this would mark the fifth consecutive quarter the company has done so.
Charles Schwab Corporation
Charles Schwab SCHW is scheduled to report fourth-quarter and 2021 results on Jan 18, before the market open. Its revenues and earnings in the quarter are expected to have improved on a year-over-year basis.
In third-quarter 2021, Schwab’s earnings surpassed the Zacks Consensus Estimate. Results reflected solid client asset balances and a rise in new brokerage accounts, which were driven by strong client activity.
In October, the company opened 397,000 new brokerage accounts, up 6% from the prior month’s levels. In November, new brokerage accounts increased 13% sequentially to 448,000. Thus, despite relatively normalized markets and low volatility, Schwab’s trading revenues are expected to have been positively impacted in the quarter under review compared with the previous reported quarter.
The Zacks Consensus Estimate for fourth-quarter trading revenues is pegged at $1.01 billion, which suggests a rise of 4.9% from the previous quarter’s reported number. The company has an impressive earnings surprise history. Its earnings surpassed the Zacks Consensus Estimate in each of the trailing four quarters, with an average beat of 3.7%.
Wednesday, 19 Jan
Bank of America
Bank of America will publish fourth-quarter earnings before markets open on Wednesday, January 19.
BOA shares rallied almost 47% during 2021, outperforming the 33% rise booked by the Dow Jones US Bank Index and the 27% increase booked by the S&P 500. Markets are bullish that Bank of America could be set to outperform its peers again in 2022 considering it is one of the most sensitive to interest rate hikes.
With three 0.25% increases currently penciled in over the next year and some other leaders in the banking industry are anticipating, even more, will be needed if the Federal Reserve wants to get on top of rapid inflation.
Procter & Gamble Co.
International consumer packaged goods giant Procter & Gamble (NYSE: PG) is scheduled to report fiscal 2022 second-quarter earnings on Jan. 19. While sales have been increasing since the pandemic onset, Procter & Gamble (P&G) is grappling with the pressures from rising costs as economies are reopening.
The coronavirus pandemic is causing shortages of workers in all parts of the world, as fewer people are willing to work or governments aren’t allowing them to work while a potentially deadly virus is still circulating aggressively. The company has already warned the market of the magnitude of harm that inflation will do to profits. Investors will be tuning in to P&G’s second-quarter results next Wednesday, looking at how accurate management’s predictions were.
Analysts on Wall Street expect Procter & Gamble to report revenue of $20.4 billion and earnings per share (EPS) of $1.66 in Q2. If the company hits the EPS estimate on Wall Street, it could be an increase of just 1.2% from the same quarter last year.
That would be below the pace of 3% to 6% EPS growth management has guided for 2022. But it also noted that most gains would flow in the second half of the year after price increases go into effect. Investors should stay tuned and see if management changes the yearly forecast after Q2 results are announced on Wednesday.
United Airlines (UAL)
United Airlines UAL is scheduled to report fourth-quarter 2021 earnings numbers on Jan 19, after market close. The company has incurred losses for seven consecutive quarters as coronavirus concerns continue to weigh on air-travel demand.
Despite being below the pre-pandemic levels, air-travel demand has significantly improved from the lows of 2020. This is expected to have boosted United Airlines’ passenger revenues in the soon-to-be-reported quarter. A strong Thanksgiving holiday travel period is likely to have aided its performance.
The Zacks Consensus Estimate for fourth-quarter passenger revenues indicates a surge of more than 100% from the year-ago reported number. It also suggests a 2.1% increase from the sequential quarter’s reported figure.
With air-travel demand continuing to be below the pre-pandemic levels. United Airlines expects total revenues to decline 25-30% in the fourth quarter from the comparable period in 2019.
Thursday, 20 Jan
Netflix Inc. on Jan. 20 will report fourth-quarter 2021 earnings, and investor sentiment has rarely been as dour.
While some analysts still believe Netflix can shake off the naysayers and generate growth amid the highly competitive shift from traditional TV to streaming video. Other analysts and many investors increasingly believe the company is overvalued.
The streaming platform shed 6.2% of its market capital for the five trading days ending Jan. 13 to close at $519.20. It has been a rough week on the market, particularly for technology stocks, but the Nasdaq still only gave up 1.8% over that timeframe and the S&P 500 lost just 0.8%. The full-year picture as of Jan. 12 is not much stronger, with Netflix’s gain of almost 9% comparing unfavorably to a 24% gain for the S&P 500.
For the full year, however, Netflix said it expects its 2021 operating margin to be 20% or better. This is up significantly from the company’s 2020 operating margin of 18%. Investors should look for management to hit its full-year guidance for a 20% operating margin, and guide for further improvement in 2022.
Pacific Premier Bancorp (PPBI)
Wall Street expects a year-over-year increase in earnings on higher revenues when Pacific Premier Bancorp (PPBI) reports results for the quarter ended December 2021. While this widely-known consensus outlook is important in gauging the company’s earnings picture. A powerful factor that could impact its near-term stock price is how the actual results compare to these estimates.
The earnings report, which is expected to be released on January 20, 2022. It might help the stock move higher if these key numbers are better than expectations. On the other hand, if they miss, the stock may move lower.
About Pacific Premier Bancorp
Pacific Premier Bancorp, Inc is a bank holding company, which engages in the provision of banking services through its subsidiary, Pacific Premier Bank. It offers deposit products and services for business and consumer customers, including checking, money market and savings accounts, cash management services, electronic banking, and online bill payment.
Friday, 21 Jan
Investors will be hoping for strength from Schlumberger as it approaches its next earnings release, which is expected to be January 21, 2022. In that report, analysts expect Schlumberger to post earnings of $0.39 per share. This would mark year-over-year growth of 77.27%. Meanwhile, the Zacks Consensus Estimate for revenue is projecting net sales of $6.09 billion, up 10.02% from the year-ago period.
Schlumberger (SLB) is expected to deliver a year-over-year increase in earnings on higher revenues when it reports results for the quarter ended December 2021. This widely-known consensus outlook gives a good sense of the company’s earnings picture. But how the actual results compare to these estimates is a powerful factor that could impact its near-term stock price.
This world’s largest oilfield services company is expected to post quarterly earnings of $0.39 per share in its upcoming report, which represents a year-over-year change of +77.3%. Revenues are expected to be $6.09 billion, up 10% from the year-ago quarter.