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7 Earnings Reports to Watch Next Week

There are seven earnings reports next week that stand out from the crowd

earnings reports - 7 Earnings Reports to Watch Next Week

Source: Shutterstock

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

Earnings season is at hand. The earnings calendar picks up next week, as big banks and major consumer names report.

The releases come at an interesting time for the market. Tech continues to soar, but elsewhere the news is mixed. The S&P 500 actually is down 2% over the past month. The Dow Jones Industrial Average has performed even worse.

More broadly, the rally since March certainly has not been popular. It’s difficult to remember any stretch that better illustrates the old metaphor of stocks climbing a “wall of worry.” The question is whether earnings next week, or through the rest of earnings season, will change the market’s trajectory.

Indeed, first-quarter reports in April and May don’t seem to have moved the market all that much. In many cases, investors simply shrugged at corporate earnings. Weak results were expected, companies delivered in kind, and the focus remained on the recovery.

But with novel coronavirus cases in the U.S. rising, and a clear divergence between growth and value, tech and industrial, second-quarter reports may be different. Expectations likely are higher. Investors may forgive another round of soft results, but they will be looking for concrete signs of progress going forward.

It’s not clear that U.S. companies will deliver. Market bears have been waiting for a catalyst to undercut this rally, and that catalyst could be on the way.

From that perspective, earnings next week can provide a preview of what’s to come. There are some big companies reporting, with these seven releases the key ones to watch:

  • PepsiCo (NASDAQ:PEP)
  • JPMorgan Chase (NYSE:JPM)
  • Delta Air Lines (NYSE:DAL)
  • Johnson & Johnson (NYSE:JNJ)
  • Domino’s Pizza (NYSE:DPZ)
  • Netflix (NASDAQ:NFLX)
  • Ericsson (NASDAQ:ERIC)

Earnings Reports to Watch: PepsiCo (PEP)

Cans of PepsiCo's (PEP) Pepsi soda are in a bucket of ice.
Source: suriyachan / Shutterstock.com

Earnings Report Date: Monday, July 13, before market open

It’s the diversification of the business that makes PepsiCo earnings particularly interesting. Between the beverage and snack segments, PepsiCo has exposure across several major channels. On Monday, we should get an update on grocery demand as stay-at-home orders are lifted, and color on restaurant and takeout sales for the beverage business.

But it’s also a big report for PepsiCo stock itself, for one key reason: The stock hasn’t moved. PEP has traded almost perfectly sideways, and in a tight range, since early April.

That in turn makes the reaction to earnings interesting. Does any sort of news, even a soft quarter (analysts are expecting sales to decline almost 7%), drive the stock higher simply due to the fact that it clarifies the story? Or are expectations still too high, even for a stock moving sideways? The first key report of the week poses an interesting test for the market.

JPMorgan Chase (JPM)

JPMorgan Chase (JPM) lettering on a corporate office in New York City.
Source: Roman Tiraspolsky / Shutterstock.com

Earnings Report Date: Tuesday, July 14, before market open

The biggest earnings news next week will come from the big banks. Tuesday sees releases from JPMorgan Chase, Wells Fargo (NYSE:WFC) and Citigroup (NYSE:C). U.S. Bancorp (NYSE:USB) follows on Wednesday, with Bank of America (NYSE:BAC) reporting the following day.

For the group as a whole, the question is if earnings can re-inspire confidence. JPMorgan probably needs to lead the way, given a long history of earnings beats and its status as the most valuable of the big banks.

But with interest rates back at zero and concerns about defaults in consumer and business loans, the big banks simply need to convince investors that the current crisis is manageable. If they do so, there’s room for a rally in a group whose shares generally are down at least one-third so far this year.

And, of course, confidence from big banks could echo across the market. Investors have bid up stocks even with the threat of a mid-term recession looming. If that threat seems less likely amid positive commentary from the largest financial institutions, there could be more room for the market as a whole to run.

Delta Air Lines (DAL)

delta (dal stock) airlines plane
Source: Markus Mainka / Shutterstock.com

Earnings Report Date: Tuesday, July 14, before market open

The travel industry desperately needs some good news. Rising pandemic fears have led the sector to pull back in recent weeks. The U.S. Global Jets ETF (NYSEARCA:JETS) at one point had doubled from its lows, but has declined about one-third from early June highs.

We’ll see if Delta can deliver that good news. Personally, I’m skeptical. Despite being optimistic toward the industry at the beginning of the year, I still see pain ahead for airlines. Leverage in the business and on the balance sheet suggests share prices can keep falling. Travel demand, particularly on the business side, isn’t returning any time soon.

Still, it’s possible Delta can change the mind of skeptics like myself. Expectations certainly are at rock-bottom. Any positive commentary from management likely would make headlines. I don’t believe Delta is going to post much of a surprise on Tuesday, but if it does, it will be more than just DAL stock that rises as a result.

Johnson & Johnson (JNJ)

A red Johnson & Johnson (JNJ) sign hangs inside in Moscow, Russia.
Source: Alexander Tolstykh / Shutterstock.com

Earnings Report Date: Thursday, July 16, before market open

Johnson & Johnson delivers one of two big healthcare earnings releases, with UnitedHealth (NYSE:UNH) reporting on Wednesday.

For J&J, the release is an opportunity to stem a fading share price. JNJ stock actually touched an all-time high in late April after snapping back from March declines. Since then, the stock has given back about 9%.

A solid report could be enough to keep a recent bounce going. But as with PEP, the market’s reaction to the report will be interesting.

It would seem like a defensive business would be catching a bid in such a time of uncertainty, yet JNJ shares are sliding. If investors see that slide as an opportunity after earnings, it should bode well for companies like Procter & Gamble (NYSE:PG) and Merck (NYSE:MRK) when they report in coming weeks.

Domino’s Pizza (DPZ)

A tall Domino's Pizza (DPZ) sign stands in Eau Claire, Wisconsin.
Source: Ken Wolter / Shutterstock.com

Earnings Report Date: Thursday, July 16, before market open

Second-quarter earnings from Domino’s should be more important than Domino’s $15 billion market capitalization might suggest. Particularly in concert with results from Pepsi, we’ll get a better picture of how consumers have reacted in the last few weeks.

For Domino’s, too, this is a big report. Shares have run into resistance repeatedly in recent months, albeit at all-time highs. With the stock trading at 31x forward earnings, profits are going to have to come in well above expectations for DPZ stock to break out.

Netflix (NFLX)

The Netflix (NFLX) logo on a tablet with earbuds and a bowl of popcorn nearby.
Source: Riccosta / Shutterstock.com

Earnings Report Date: Thursday, July 16, after market close

Investors who believe the rally in tech needs to cool off may get some confirmation from Netflix earnings on Thursday afternoon. Netflix incredibly has a market capitalization that now dwarfs that of Disney (NYSE:DIS). The stock trades at 60x next year’s consensus earnings estimates, and free cash flow multiples are even higher.

To be sure, NFLX stock is a pandemic winner. But at some point, that tailwind has to be priced in. With shares up 57% already in 2020, Netflix has added over $80 billion in market value this year. It’s fair to wonder if the rally has to run out of steam at some point.

Meanwhile, expectations are going to be high, particularly on the subscriber front. With literally billions of people stuck at home, Netflix had an unprecedented opportunity to pick up subscribers.

If Netflix was able to capitalize on that opportunity, and NFLX stock still rallies after earnings, that bodes well for other dearly valued names as earnings season rolls on. Anything less, however, and NFLX stock could have a long way to fall — while providing some ammunition for market skeptics on its way down.

Ericsson (ERIC)

Ericsson (ERIC) logo on a smartphone screen.
Source: rafapress / Shutterstock.com

Earnings Report Date: Friday, July 17, before market open

Investors won’t be the only ones listening to commentary from Ericsson on Friday morning. The Swedish telecommunications manufacturer is embroiled in world geopolitics. The U.S. government reportedly is looking to back Ericsson and Finnish rival Nokia (NYSE:NOK) as they compete against China’s Huawei.

It would seem unlikely that Ericsson management will have much to say about the political situation on Friday. But its commentary about the 5G rollout amidst the pandemic will be closely watched by investors across the space.

After all, it’s possible the pandemic could accelerate 5G demand as data usage increases. But governments and telecommunications providers may also pause their plans as they deal with the economic impact of the current crisis.

Investors in stocks like Nokia, Cisco Systems (NASDAQ:CSCO) and Qualcomm (NASDAQ:QCOM) thus will be listening closely to Ericsson’s commentary on Friday. I’d expect the news will be good, as I remain bullish on ERIC stock. But the question might be whether the news is good enough to move other stocks as well.

After spending time at a retail brokerage, Vince Martin has covered the financial industry for close to a decade for InvestorPlace.com and other outlets. As of this writing, he has no positions in any securities mentioned.


Article printed from InvestorPlace Media, https://investorplace.com/earnings-reports-to-watch-next-week/.

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