Netflix raised the bar last week with its very strong 4th quarter and 2020 figures, plus a bullish outlook, this week will be up to the likes of Apple, Microsoft, Tesla and Facebook to match that optimism or beat it to keep investors convinced that the 4th quarter earnings season won’t be as bad as first thought.
About a quarter of the S&P 500 are due to report this week. Apple is on Wednesday along with Tesla and Facebook. Microsoft reports on Tuesday. Chevron, the US oil major is due to release its results on Friday which will tell how well the energy sector has bounced back from the mid-year slump.
In fact it is looking quite on the cards that with only OK reports from these tech giants that the December quarter season won’t be as bad as thought a month ago.
Reuters says that of the 66 S&P 500 companies that have reported earnings, 87.9% have beaten Wall Street estimates, well above the long-term average of 65%, according to data from Refinitiv.
As a result, consensus expectations are getting revised up with earnings likely to have made it back to pre-covid levels, according to the weekly note from the AMP’s chief economist, Dr Shane Oliver.
“While consensus estimates have now improved to a 7% year on year decline, strong business conditions readings and results so far point to earnings being roughly flat or slightly up on a year ago,” he said.
And FactSet (the US financial group) said on the weekend that “more S&P 500 companies are beating EPS estimates for the fourth quarter than average, and beating EPS estimates by a wider margin than average.”
“As a result, the index is reporting higher earnings for the fourth quarter today relative to the end of last week and relative to the end of the quarter,” FactSet said.
“Despite the increase in earnings, the index is still reporting a year-over-year decline in earnings, mainly due to the negative impact of COVID-19 on a number of industries within the index.
“But, if earnings continue to surpass estimates at current levels, it is likely the index will report year-over-year earnings growth for the quarter for the first time since Q4 2019,” FactSet said in a weekend note.
In addition to Apple, Tesla, Facebook, Chevron and Microsoft, others reporting this include Caterpillar, Johnson & Johnson, 3M, Texas Instruments, Eli Lilly, Abbott Labs, American Airlines, Southwest Airlines, US Steel, Nucor, Starbucks, McDonald’s, Colgate Palmolive, General Dynamics, Boeing, Northrop Grumman, AT&T, Whirlpool, Comcast, Visa, Mondelez, Honeywell, Textron and Mastercard.
Earnings are expected to rise 23.7% in 2021 after falling 14.1% in 2020, according to Refinitiv.
In Australia, Atlassian is due to report this week, along with GUD (Thursday and Friday respectively).
Quarterly reports are expected from Fortescue Metals, Mineral Resources, OZ Minerals and Newcrest.