Company / Analytics

Analytics, 21 July 2020

Big Q2 company earnings this week

Q2 2020 earnings season is in full swing, and over 90 S&P 500 companies and eight Dow Jones components are slated to report earnings this week. Big tech names, including Microsoft, Intel, Twitter, and IBM, high-flying Tesla, and Blue chips Coca-Cola, Verizon, American Express, and Travelers are among dozens of major companies releasing results this week. We provide a brief look at some of the selected stocks and what analysts are saying.

The second quarter marked a slight upturn in the U.S. economy from its crippling March lows, and the jury’s out on whether the market will see a V-shaped recovery. The S&P 500 components have posted a 47.4% decline in second-quarter profits with nearly 9% of reports issued. Analysts model a 44% earnings decline for the index as a whole, taking into account already-reported results and estimates for the rest. That would mark the sharpest year-over-year dip in earnings since the fourth quarter of 2008 when profits plunged 70%. This earnings reporting season is so far living up to expectations that it will be the worst since the depths of the 2008 financial crisis, but some big names could offer some better news.

Tuesday: Lockheed Martin, Coca-Cola, United Airlines earnings

Lockheed Martin

Military aviation giant Lockheed Martin Corporation is set to report second-quarter earnings results before the opening bell on Tuesday. The June quarter has seen several companies grapple with the effects of the coronavirus pandemic. But the same cannot be said about Lockheed Martin. Being a defense contractor, Lockheed Martin is relatively a safe haven from any economic upheaval caused by the spread of the virus. Economic recession and record unemployment levels have had no material impact on its business. Meanwhile, with an order accumulation worth $144 billion, the company certainly thrived in the second quarter.

While Lockheed Martin’s civil aerospace peers saw order cancellations for passenger planes on mass scale amid the pandemic, the defense contractor’s aeronautics, and missile and fire control units are expected to have experienced substantial growth in the second quarter. It’s widely expected that Lockheed Martin’s second-quarter earnings per share will be $5.71, indicating a 14.2% rise from the same period a year ago. Analysts project revenue of $15.2 billion.

Coca-Cola

Coca-Cola will report earnings on Tuesday before the stock market opens. The action so far Monday doesn’t exactly scream confidence, as the shares dipped 1.5% while the broader stock market is in positive territory. Though Coca-Cola is well run, the closure of restaurants and convenience stores during the pandemic have likely impacted its business. Analysts project revenue of $7.2 billion and earnings per share of 40 cents.

United Airlines

After Delta Air Lines Inc, delivered a $5.72 billion loss for the June quarter and warned that a “sustainable recovery” seems to be more than two years away, United and Southwest are on deck. Analysts believe that United has been the most forthcoming with information regarding the reality of the pandemic and “more right than wrong” during the crisis.

Some analysts believe that United Airlines looks bearish since right as the reopening was occurring, they were starting to fly fuller and fuller planes, and starting to finally get some traction. Analysts will be looking for information on planned staff reductions and capacity changes.

Wednesday: Microsoft, Tesla

Microsoft

Like other tech giants, Microsoft is on a better trajectory as it likely benefited from stay-home trends during the coronavirus pandemic that drove greater demand for remote-work services and equipment and is expected to eke out per-share earnings growth while posting slight dips in net income. But Microsoft has a tremendous long-term story, and analysts have been bearish on the company in the last four weeks. CNBC’s Jim Cramer projects revenue of $36.4 billion, and earnings per share (EPS) of $1.38. Microsoft has backtracked slightly this month, which could make for an interesting entry point for buy-and-hold investors.

Tesla

Tesla is expected to show red ink for the second quarter, according to FactSet estimates, though analysts predict a narrower loss than a year ago. Some are still holding out hope that the company can post a surprise profit and help land Tesla in the S&P 500, which requires four straight quarters of profitability for entry; Tesla has been profitable the past three quarters. Wall Street is predicting Tesla will make revenues of up to $5.1 billion, and projected losses per share of 14 cents.

Other companies reporting revenues this week include:

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