3 Earnings Reports to Watch Next Week

These three earnings reports next week are worth highlighting

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Editor’s note: InvestorPlace’s Earnings Reports to Watch is updated weekly. Please check back next week for our latest earnings picks.

Earnings season begins at an important time for the U.S. equity market. The S&P 500 hit all-time highs at the peak of the second-quarter earnings calendar — and promptly fell almost 6% in a matter of sessions.

Nervous trading and projections for a potential “earnings recession” suggest a repeat. Meanwhile, pullbacks in high-multiple growth stocks echo the declines in cyclical stocks that presaged last year’s big fourth-quarter selloff.

In that context, earnings reports next week look key — if not crucial. There are major companies reporting in a cross-section of industries. There’s enough in terms of breadth and depth to highlight the health of the U.S. economy and investor sentiment.

Most notably, big U.S. banks will report their third-quarter earnings. A well-known and increasingly challenged consumer giant will try and calm investor nerves. And one of the market’s biggest growth stocks will try and avoid the stumble that sent its stock falling after second-quarter numbers. Next week is the first week in an earnings season that may well see some fireworks.

JPMorgan Chase (JPM)

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Earnings Report Date: Tuesday, Oct. 15 before market open

JPMorgan Chase (NYSE:JPM) kicks off big bank earnings on Tuesday morning, along with Wells Fargo (NYSE:WFC) and Citigroup (NYSE:C). The Q3 report from Bank of America (NYSE:BAC) comes the following day.

Historically, bank stocks haven’t made big moves after earnings. Indeed, JPM options price in a barely 3% move next week. So investors shouldn’t necessarily expect enormous moves in any of the big bank issues.

But the reports may well set the tone for earnings season. Commentary from executives — particularly well-respected JPMorgan Chase CEO Jamie Dimon — might move investor sentiment. At this point, the market likely wants to be reassured. It remains to be seen whether reassurance will be the message from the country’s largest banks.

Johnson & Johnson (JNJ)

Negative Press Presents a Buying Opportunity with JNJ Stock
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Earnings Report Date: Tuesday, Oct. 15 before market open

Investors in Johnson & Johnson (NYSE:JNJ), too, are looking for reassurance. JNJ stock was rocked last year by a report that it knew of asbestos in its talcum powder products.

More recently, opioid lawsuits and now an $8 billion judgment related to its Risperdal anti-psychotic drug have only added to the legal risks. Combined, they’ve sent JNJ stock back toward the low end of a range that’s held since late last year.

I wrote at the beginning of the month that J&J could get past those legal issues — but with the mounting negative publicity, that may take some time.

At the least, investors in one of the market’s most widely held names will be looking for some good news from the company. And with other pharmaceutical names following with earnings reports of their own, the sector on the whole likely will be watching JNJ stock closely next week.

Netflix (NFLX)

Things Just Keep Looking More Precarious for Netflix Stock
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Earnings Report Date: Wednesday, Oct. 16 after market close

Netflix (NASDAQ:NFLX) cannot afford even a decent report on Wednesday afternoon. Growth stocks with minimal or zero profitability have been  falling for weeks. NFLX stock plunged after its second-quarter report in July, thanks to a big subscriber miss.

Netflix needs a blowout quarter on the sub front to reverse a 26% decline from July highs. That’s doubly true with Disney (NYSE:DIS), AT&T (NYSE:T) and Comcast (NASDAQ:CMCSA) set to provide competition in the coming quarters.

The options market seems to realize how big the quarter is: Straddle prices require a 10%+ move to turn a profit. But for investors who don’t have a direct position in NFLX, the reaction to the report is worth watching as well.

Is the market willing to step in for growth stocks at lower prices? Or is the pullback in NFLX, Roku (NASDAQ:ROKU), Shopify (NYSE:SHOP) and other names evidence that valuation concerns are here to stay? The report is crucial for NFLX stock. It may well be illuminating for other growth stocks.

As of this writing, Vince Martin has no positions in any securities mentioned.


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