The narrow focus of traders and investors that dominated the market towards the end of last year, and which gave us the phrase “Magnificent Seven,” seems to have continued so far this year, even when it comes to which earnings reports people are talking about. As a result, most people seem to be focused on next week, when Microsoft (MSFT), Alphabet (GOOG), Apple (AAPL), Amazon (AMZN), and Meta (META) will all report. There are, however, some noteworthy earnings due this week that will help to clarify the overall picture right now, and investors should be paying attention to them rather than to just a handful of well-publicized companies.
Tomorrow, for example, a lot of people will be focused on Netflix's (NFLX) earnings, but for me, while I know it is a bit old fashioned to worry about things like industrials, I just can’t shake the feeling that If stocks are to extend recent gains and indices are to continue setting new highs the country needs to keep making things other than movies and TV shows. So, I for one will be taking a close look at GE's (GE) earnings, or more accurately their guidance and forecasts for this year. About a month ago, I wrote about GE’s “remarkable success story”, and one of the effects of that turnaround has been to return the company to the status of a bellwether industrial stock.
It also means that when they report tomorrow morning, EPS results relative to the consensus forecast for $0.90 aren’t the most important thing for investors to watch. The turnaround at GE has come about due to a more focused approach and better cost controls. A continuation of improvements in those areas could produce a beat, even if economic and market conditions are not ideal. That makes performance relative to the consensus revenue forecast for $17.42 billion in Q4 of last year and/or guidance for Q1 above the current $15.35 billion the most important things to watch for in GE’s earnings.
None of this means that I am indifferent to all of the mega-tech type companies’ earnings, though. Tesla's (TSLA) earnings after the market closes on Wednesday will be fascinating. Not because of the numbers so much, but because there is a chance of some serious drama from the famously un-drama-averse Elon Musk. I have not seen much, if any, speculation about a dramatic announcement from Musk in the report or subsequent investor call, but I just can’t shake the feeling that it is possible. Tesla’s self-styled “Technoking” recently let it be known that he was “uncomfortable growing Tesla to be a leader in AI & robotics without having ~25% voting control," hinting that if he wasn’t granted that, he might leave the company. His history and style make it quite possible that he would, at the very least, use the platform of an to make that threat more explicit.
Then, on Thursday, we can focus once again on businesses whose performance last quarter and outlooks for this will provide valuable clues about broad economic conditions. Before the market opens, Union Pacific (UNP) will release their numbers and, as with GE, the volume of business they saw in Q4 2023 and that they anticipate for Q1 2024 are actually more important than their profitability. Rail freight volumes are an indicator of overall economic activity, so while UNP is not as sexy a company as, say GOOG or META and has nothing to with AI, their earnings will be interesting, nonetheless. Forecast revenue of $6.05 billion for Q4 and estimates for $6.08 billion for the current quarter are the numbers to watch here.
Last, but by no means least, investors should be watching Visa's (V) results later that day, not so much for the actual numbers, but rather for their view on global consumer spending and sentiment. Visa has a unique handle on trends in those areas, and it is important to remember that even if things are looking up domestically, the global growth outlook matters.
With the exception of Tesla on Wednesday, this week is not one of splashy, hyped up earnings reports, but some of those that are coming are important, nonetheless. In their own ways, GE, Union Pacific, and Visa will all give us a deeper knowledge of overall economic conditions and the outlook for the immediate future, while there is a chance of something dramatic coming out of Tesla’s report and call. That is enough to male it a fascinating week of earnings, and one to which investors should be paying close attention.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
Martin Tillier
Martin Tillier spent years working in the Foreign Exchange market, which required an in-depth understanding of both the world’s markets and psychology and techniques of traders. In 2002, Martin left the markets, moved to the U.S., and opened a successful wine store, but the lure of the financial world proved too strong, leading Martin to join a major firm as financial advisor.
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