A badly battered market sure could use a reason to rally right about now, and there’s nothing quite like boffo corporate earnings and outlooks to set one off.
First-quarter earnings season moves into a higher gear next week, with a slew of big names jammed into just four days of trading. (Markets are closed for Good Friday.)
With stocks stuck in a selloff, investors will be praying that some of the biggest names can help arrest the slide with Street-beating results and outlooks.
If anything, it’s been especially frustrating to have markets tumbling without an obvious smoking gun. Momentum stocks and biotechnology shares are leading stocks lower, but for no discernible reason. That’s only adding to the anxiety.
Investors need a story to go with what’s happening in share prices — even if that narrative is usually wrong. With no rhyme nor reason for the April swoon, the peak weeks of corporate earnings only come into greater relief.
True, some great earnings news won’t necessarily help stocks find their footing, but we shudder to think what the opposite could mean.
Here are five key earnings reports on tap next week that better not disappoint the Street if the market hopes to get this selloff under control:
Citigroup (C) reports earnings on Monday before the market opens, and investors are braced for bad news.
The only major money-center bank to fail the Federal Reserve’s latest stress test already warned that the “F” grade means it could miss a profitability target. True, with that bad news out of the way, maybe C can deliver an upside surprise … but it’s going to be tough. JPMorgan Chase (JPM) kicked off bank earnings season with a miss, and JPM is in a lot better shape than Citigroup.
Analysts project C stock earnings per share (EPS) to drop to $1.14 from $1.23 a year ago, according to a survey by Thomson Reuters. Revenue is projected to decline 5.5% to $19.37 billion.
Yahoo (YHOO) reports earnings Tuesday after the closing bell. Yahoo’s work-in-progress turnaround always makes its earnings reports interesting. And with the tech sector tumbling, stakes are even higher this time around.
The Street will focus on the usual metrics for core and display ad revenue, and it will be keen to hear how YHOO’s new ad tech platform is performing. Of even more importance is how YHOO is faring in video display ads and mobile. Any signs of deterioration in the ad market won’t be good news for anyone in tech.
Analysts forecast YHOO stock EPS to drop to 37 cents from 38 cents a year ago. Revenue is expected to remain essentially flat at $1.08 billion.
Bank of America (BAC)
Bank of America (BAC) reports results before markets open Wednesday and — like Citigroup — the money center bank’s earnings are important because it’s hard to see the market rising without financial stocks participating.
Weakness in fixed-income trading and the mortgage business should once again weigh on results. Those are largely what caused JPM to miss. BAC is coming up against some tough year-over-year comparisons, but as long as it doesn’t spring any nasty surprises a la JPM, BAC stock should be fine.
Analysts project BAC stock EPS to fall to 5 cents a share from 10 cents a year ago. Revenue is forecast to decline 5% to $22.33 billion.
Google (GOOG) releases earnings after the bell Wednesday — and for the sake of the battered tech sector, it had better not miss Street projections as it did last time around.
Mobile search will be an area of intense focus for the Street, but even more attention will be paid to cost-per-click (CPC), a key advertising metric that has been trending down for some time. If nothing else, it will be hard to top last season’s GOOG earnings report for fireworks. That’s when GOOG announced both the sale of Motorola Mobility and the approval of the stock split that just went into effect.
Analysts expect GOOG stock EPS to rise to $6.42 from $5.79 a year ago. Revenue is forecast to increase 11% to $15.54 billion.
Goldman Sachs (GS)
Wall Street’s most powerful investment bank reports on Thursday before the markets open. Goldman Sachs (GS) is projected to post lower profit, hurt partly by sleepy trading activity in the fixed-income markets, but it will almost certainly beat expectations by a wide margin. That beat could give stocks a lift.
GS has a long history of clobbering analysts’ estimates — and by a lot. It hasn’t missed on the bottom line in at least two years, exceeding expectations by an average of 28% over that time.
Analysts forecast GS stock EPS to fall to $3.51 from $4.29 a year ago. Revenue is expected to decline 14% to $8.7 billion.
As of this writing, Dan Burrows did not hold a position in any of the aforementioned securities.