Earnings Week: Netflix Headlines US, Local Miners In Focus
March quarter exploration and production reports from some our biggest miners and energy groups will dominate events this week locally, apart from the fallout from the bombing raids in Syria.
Before detailing the quarterlies there’s a couple of earnings reports out this week in Australia.
Australian Pharmaceutical Industries (API) and the Bank of Queensland both report their half year results this week.
Bank of Queensland will give us a hint on how the big three - ANZ, NAB and Westpac might go when they report their interims on may 1, May 3 and May 7 respectively.
API’s results will be watched closely to see if it suffers the same negative impact that rival, Sigma Healthcare revealed in its latest results last month.
And Sydney based tech company, Atlassian is due to report its March (3rd) quarter figures later in the week.
BHP Billiton, Rio Tinto, Oz Minerals, Whitehaven Coal, South 32, Santos, Oil Search and Woodside all release their March quarterlies this week, while Woodside also holds its 2017 annual meeting.
All will give us a timely update on the health of the mining and energy sectors.
Rio Tinto especially will be watched closely to commentary on what is happening in the alumina and aluminium industries (see separate story).
The US earnings season steps up this week with the figures from Netflix tomorrow morning, Sydney time, to be the major scene setting announcement in a week that will be dominated by the fallout from the US, UK and French air raids on Syria.
About 60 S&P 500 companies are due to report March quarter results this week.
While major banks, Citi, Well Fargo and JPMorgan did well with better than expected results (JP Morgan’s was an al time quarterly high) the bombing in Syria will overshadow the flow of earnings - except for Netflix which is one of the key FAANG stocks (Facebook, Apple, Amazon, Netflix and Google (Alphabet).
While JP Morgan chairman, Jamie Dimon said it was “spring time” for banks, investors said nix, its still winter and sent the shares down 2.7%.
Citi shares fell 1.6% while Wells Fargo shares lost 3.4% after it became clear the bank faces a massive $US1 billion fine from regulators over its latest series of transgressions, on top of the $US185 million fine back in 2016 for credit card and account abuses.
Now investors are looking to see if Goldman Sachs, Bank of America and Morgan Stanley will follow suit this week with good or higher than expected results.
Netflix is tipped to do well with investors watching the number of new US and international subscriber numbers to see if the strong growth in the final months of 2017 has continued into the start of 2018.
Other companies to report include railroad, CSX, drug giants, Abbott Labs and Johnson & Johnson, weakened industrial giant, General Electric and manufacturers Honeywell, Danaher and Textron. Others reporting include steelmaker Nucor, building products group, PPG, American Express, marketing and ad giant, Omnicon and oil services groups, Schlumberger and Baker Hughes GE.
Even though the Well Fargo result was a bit better than expected, directors stunned investors by revealing the prospect of a massive fine.
Wells said on Friday that its results were subject to revision as key regulators, Consumer Financial Protection Bureau and Office of the Comptroller of the Currency prepare the latest sanction against the bank. It is the latest blow to Wells, already stung by a series of regulatory and legal difficulties.
As punishment for what it said were years of customer abuses, the Federal Reserve said in February it would prevent Wells from expanding its $US1.95 trillion balance sheet. While first quarter net income rose from $US5.6 billion a year ago to $US5.9 billion, Wells said the earnings were “subject to change”.
“The CFPB and OCC have collectively offered to resolve for an aggregate of $US1bn in civil money penalties. At this time, we are unable to predict final resolution of the CFPB/OCC matter and cannot reasonably estimate our related loss contingency,” Wells said in its announcement (https://www.wellsfargo.com/assets/pdf/about/investor-relations/earnings/first-quarter-2018-earnings.pdf).
Glenn Dyer has been a finance journalist and TV producer for more than 40 years. He has worked at Maxwell Newton Publications, Queensland Newspapers, AAP, The Australian Financial Review, The Nine Network and Crikey.
At the AFR he was a finance writer, Finance Editor, News Editor and Chief of Staff. At the Nine Network he was supervising producer of Business Sunday for more than 16 years. He has also written for other online and analogue print publications here and overseas.