While a whole lot of market headlines have been largely focused on trying to game the new mood in Washington, the real signal behind the noise has been coming from a lot closer to Wall Street.
Earnings season is approaching a climax and so far a lot of trading lights are flashing green for the first time in years. With over 35% of the S&P 500 companies already on the books showing around 4.6% growth back on the table for the market as a whole, we know the broad strokes.
This is great to see, especially when you consider where we were a year ago. And while I expect the rest of earnings season to be relatively calm, that doesn’t mean there aren’t new things the upcoming reports can tell us.
In fact, three companies reporting earnings over the next few weeks should give us some good insight into economies and sectors that have struggled in the past. This is why I’m so excited for what Yum China Holdings Inc (NYSE:YUMC), Mylan N.V. (NASDAQ:MYL) and Tesla Inc (NASDAQ:TSLA) have to say about China, biotechs and the energy sector.
Yum China (YUMC) Earnings
Yum China’s results on Tuesday will shed light on what Beijing won’t tell us and what the markets around the world need to know: the health of the mainland Chinese consumer, as measured by the most accurate indicator ever invented.
Yum China runs more than 7,300 Kentucky Fried Chicken and Pizza Hut restaurants in China — the top chains in the country — and if the number holds up sequentially, it’s a pretty good sign that over 1.3 billion hungry people are still snacking as much as ever.
I’m looking for $2 billion in sales and management’s take on conditions on the ground. Unless you’re really in the stock as anything other than a proxy on the Chinese consumer, that’s the key number to watch.
Mylan (MYL) Earnings
Mylan’s earnings release on Feb. 15 is also more color than numbers. This particular company is at the center of controversy around drug pricing and healthcare regulation — remember the EpiPen?
I’m looking for management to answer questions on the mood in Washington in terms of price controls and even repatriation of foreign profit. Of course if the business is booming, MYL itself could be a good buy here at barely eight times forward earnings and annualized growth north of 10%.