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The Earnings Beat: Four Stocks To Watch For the Coming Week


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Despite a downbeat close on Friday, equities had a solid week with the S&P 500 index rising 2%. Tech stocks bounced back to the some extent, helping fuel an almost 3% gain in the Nasdaq Composite Index, which regained its 7,000 mark.

And there’s a good chance that these gains are here to stay, if the earnings results by some of the nation’s largest banks serve as indication. On Friday, earnings from J.P. Morgan Chase (JPM), Citigroup (C), Wells Fargo (WFC) and PNC (PNC) all topped analysts' bullish estimates. These results, combined with solid outlook, suggests that the so-called “headline risks” in equities could take a back seat to higher revenuer and profits this earnings season.

In that vein, here are a few stocks to keep an eye on.

Netflix (NFLX) - Reports after the close, Monday, April 16.

Wall Street expects Netflix to earn 64 cents per share on revenue of $3.69 billion, translating to year-over-year growth of 60% and 40%, respectively.

What to Watch: Expectations are high in terms of subscriber additions. The internet movie streaming giant is expected to deliver first-quarter total subscriber net additions of 1.45 million in the U.S. and 5.0 million internationally. And options trader are bracing for Netflix stock to see a 10% move (up or down) based on what its subs numbers, guidance look like.

Neflix’s Q1 results will be the first among its FAANG peers — Facebook (FB), Amazon (AMZN), Apple (AAPL) and Google (GOOG , GOOGL) — to be released. To the extent it delivers on both the top and bottom lines, while issuing confident guidance, this would bode well for the tech sector as a whole and setting the tone for some of the beaten-up FAANG names.

IBM (IBM) - Reports after the close, Tuesday, April 17.

Wall Street expects IBM to earn $2.40 per share on revenue of $18.78 billion, translating to year-over-year growth of 0.84% and 3.4%, respectively. Analysts also expect technology services and cloud-platform revenue to rise 0.8% to $8.28 billion, while revenue in cognitive-solutions is expected to reach $4.22 billion, up 3.8%.

What to Watch: The main question heading into the quarter is to what extent have IBM’s newer businesses grown to offset the decline in its legacy operations? The company’s success, particularly in the areas of technology services, cloud-platform and cognitive-solutions (includes IBM’s Watson AI) will determine its future. Despite its efforts in these new endeavors, the company’s higher-margin services revenue continue to lag systems revenue growth.

Alcoa (AA) - Reports after the close, Wednesday, April 18.

Wall Street expects Alcoa to earn 68 cents per share on revenue of $3.08 billion, translating to year-over-year growth of 8% and 16%, respectively.

What to Watch: In March, under the Section 232 Investigations and Tariffs, a 10% tariff on aluminum imports and a 25% tariff on steel imports was imposed by President Trump, sending aluminum prices under pressure, which impacted steel stocks like U.S. Steel Corporation (X) and AK Steel (AKS). Alcoa stock price sold off, along with several steel and aluminum manufacturers. On Wednesday analysts will look for commentary by management on what impact (if nay) a potential trade war with China and other regions might have on the business.

General Electric (GE) - Reports before the open, Friday, April 20.

Wall Street expects GE to earn 12 cents per share on revenue of $27.39 billion, translating to year-over-year declines of 42.9% and 1%, respectively.

What to Watch: To comply with new accounting standards, General Electric on Friday re-stated in earrings for the past two years, saying that it took a $4.24 billion equity charge and reduced its two-years earnings by 30 cents per share. On the news, the stock rose 2.3% given that the reported figured were in line with expectations the industrial conglomerate set earlier this year.

Is the worst now over for GE stock? When the company reports earnings this coming Friday, investors will want assurances that there are no other shoes to drop. JPMorgan analyst Stephen Tusa this week reiterated his $11 price target, implying an 18% decline from current levels.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.



This article appears in: Investing , Earnings , Investing Ideas , Stocks , US Markets
Referenced Symbols: NFLX , IBM , GE , AA


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