Editor’s Note: This article is regularly updated to bring you relevant, up-to-date information.
Earnings season is now in full swing. Recently, third-quarter results got off to a strong start, with some of the largest U.S. banks reporting better-than-expected financials over the past week.
Looking ahead, there are now several blue-chip companies on deck to report earnings for the July through September period, including major technology, financial and consumer products names. Taken together, the earnings reported over the coming week should help shift the stock markets into positive or negative territory, depending on the results.
So, with shareholders hoping for a market recovery after a major selloff in September, here are seven companies reporting earnings the week of Oct. 18:
- IBM (NYSE:IBM)
- State Street (NYSE:STT)
- Johnson & Johnson (NYSE:JNJ)
- Netflix (NASDAQ:NFLX)
- Tesla (NASDAQ:TSLA)
- AT&T (NYSE:T)
- American Express (NYSE:AXP)
Stocks Reporting Earnings Next Week: IBM (IBM)
Kicking off the week ahead is New York-based technology giant IBM (International Business Machines). IBM stock has been trending higher lately, rising nearly 6% over the past month and bringing its gains for the year to nearly 15%. Currently, the company’s share price sits around the $144 mark.
The main catalyst behind the current rally has been news that IBM will spin off its underperforming managed infrastructure services unit Kyndryl by year’s end. Kyndryl’s net losses swelled to $2.01 billion in 2020, up from $943 million in 2019. So, offloading the division should alleviate a financial burden for “Big Blue” and send the stock even higher.
The sale of Kyndryl comes as IBM focuses on its information technology consulting business, as well as on hybrid cloud and artificial intelligence (AI) markets. These segments generated just over half (55%) of IBM’s revenues in 2020, but the company has forecast that the percentage will rise to 70% after the Kyndryl sale. IBM has also forecast that, between 2022 and 2024, it will generate about $3 billion in new revenues each year. For its Q3 earnings results, Wall Street is looking for IBM to announce revenues of $17.77 billion and earnings per share (EPS) of $2.50.
State Street (STT)
Next week, there are still a few significant banks left to report earnings and chief among them is Boston-based State Street.
STT stock has risen recently, along with the broader banking sector. Over the past one month, the share price has gained almost 8%, currently hovering around the $93 level. Year-to-date (YTD), the stock is up 28%. But a decent earnings beat could send shares of the lender even higher. Analysts are looking for State Street to report Q3 revenue of $2.96 billion and EPS of $1.92. However, STT could beat those projections if, like other banks, it continues to release loan-loss reserves in the most recent quarter.
Additionally, like other large U.S. banks, State Street is expanding through targeted acquisitions. In September of this year, the bank announced a $3.5 billion cash deal to acquire Brown Brothers Harriman’s Investor Services business. That will make it “the leading asset servicer globally.” Also in September, State Street bought Mercatus. That acquisition will allow it to give “a fully integrated platform to institutional investors” for growing its private banking business. The company has said that these deals — coupled with previous buyouts — will result in cost synergies and revenue moving forward.
Stocks Reporting Earnings Next Week: Johnson & Johnson (JNJ)
It’s a big week for Johnson & Johnson — and not just because of its Q3 earnings. Rather, the U.S. Food and Drug Administration’s (FDA) Vaccines and Related Biological Products Advisory Committee has been meeting to decide on whether to approve Johnson & Johnson’s proposed Covid-19 booster shots.
Approval of the booster shot (which is expected) could provide a much needed shot in the arm for JNJ stock. Right now, shares are up a slight 3% YTD at about $161 per share. These tepid gains come despite the fact that it has forecast $2.5 billion in Covid-19 vaccine sales this year — half of which is expected to come in Q4.
Of course, JNJ stock seems to have been harmed by the company lowering its production targets for its vaccine this year. Originally, the company forecast that it would produce 1 billion doses in 2021, but it has since cut that estimate in half to 500 million doses on the low end. That cut hasn’t sat well with investors, who have sold off the stock.
Still, beyond its vaccine, this company continues to be a leading consumer goods name, with everyday products like Tylenol. Analysts forecast that Johnson & Johnson will report Q3 revenues of $23.74 billion and EPS of $2.36.
Shares of streaming giant Netflix typically swing dramatically once the company reports earnings. Mainly, the big number that tends to move NFLX stock is the company’s subscriber data. If new subscriptions beat estimates, the stock rises. Conversely, if there are any signs of a slowdown in subscriber growth, the share price tanks.
NFLX stock sold off earlier this year, after subscriptions slowed dramatically. The company added 37 million subscribers worldwide in 2020 during the pandemic, but added just 5.5 million subscribers in the first half of 2021. That includes fewer than 2 million new accounts in Q2.
However, expectations are that Netflix will report a boost in subscriptions when it announces Q3 numbers on Oct. 19. After enduring production delays during the pandemic, the streaming service is once again releasing popular new content. Programs such as Squid Game and Midnight Mass are finding a global audience and giving the platform renewed buzz.
Now, analysts are calling for the company to report Q3 revenues of $7.48 billion and EPS of $2.56. So far this year, NFLX stock is up 16% at around $630 per share. It has seen a 9% rally in the past one month, likely on anticipation of a strong end to the year.
Stocks Reporting Earnings Next Week: Tesla (TSLA)
There’s always some drama when electric vehicle (EV) maker Tesla reports earnings. So, as the company grapples with a massive recall of its vehicles in China, an investigation into its self-driving software and the relocation of its headquarters to Texas, there is sure to be some grist for the mill when it reports Q3 results on Oct. 20. Wall Street will be watching closely to see how many vehicles the company managed to deliver in the quarter — and if it is succeeding in maintaining its leadership position in the EV market.
Any surprise to the upside could extend the current rally in TSLA stock. The company’s share price has been on an upswing since Labor Day, rising nearly 12% in the past month to its current price of well above $800. While still below its 52-week high of $900.40 per share, the recent spark has led several analysts to predict that TSLA is headed above $1,000.
We’ll see if this momentum can be maintained coming out of the Q3 report. Analysts expect Tesla to announce revenues of $11.22 billion and EPS of 96 cents for the period.
Unlike some of the other stocks on this list, AT&T is seeing continued share price underperformance. In fact, this telecom giant’s stock is down 10% YTD at just below $26. In the past five days, shares have sold off some 4%.
This continues to be a frustrating trend for the Texas-headquartered company. T stock has fallen 34% in the last five years. At current levels, it is also near a 10-year low. Viewed by many on Wall Street as an outdated legacy business, AT&T is still trying to reinvent itself. The company has pushed into 5G wireless networks, offloaded unprofitable assets like DirecTV and spun off WarnerMedia in a $43 billion merger with Discovery (NASDAQ:DISCA).
All of these moves have done little to win over investors. Many remain fixated on the fact that AT&T is lowering its dividend payout ratio, from 63% previously to 40%. Those bearish on T stock also point to the major investments it’s making in 5G infrastructure and more as a drain on current and future profits.
Clearly a strong earnings report is sorely needed from AT&T. Analysts forecast that the company will post revenues of $39.4 billion and EPS of 77 cents in Q3.
Stocks Reporting Earnings Next Week: American Express (AXP)
Last up on this list, American Express has been one of the best performers among credit card stocks this year, having risen 47% YTD to its current price of above $175. It has also risen 11% in the last one month.
Driven higher by the economic reopening, the rise of AXP stock has continued uninterrupted over the past nine months. Moreover, the company reported that it grew its loan balances 7% in Q2. Still, they remain 11% below 2019 levels, suggesting there’s more room to grow here. (Although overall spending at the company by customers (business and consumer combined) is up 3% this year compared to 2019.)
For the third quarter, which AXP plans to announce on Oct. 22, Wall Street is predicting revenues of $10.53 billion and EPS of $1.77. The Street expects a strong report from American Express for the period, fueled by a rise in travel and entertainment spending as the vaccine rollout accelerates worldwide. The company has also been expanding its financial technology (fintech) offerings and is even experimenting with cryptocurrencies.
American Express beat analyst estimates in three of the last four quarters. Can the company do it again? We’ll find out next Friday.
On the date of publication, Joel Baglole did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
Joel Baglole has been a business journalist for 20 years. He spent five years as a staff reporter at The Wall Street Journal, and has also written for The Washington Post and Toronto Star newspapers, as well as financial websites such as The Motley Fool and Investopedia.