While big oil will dominate the week ahead in the US first quarter reporting season – there’s one tech giant to get out of the way first – Apple which reports tomorrow morning, our time.
Last week tech companies lead the 147 S&P 500 companies which reported, with solid results from Amazon and Microsoft. This week there’s another 100 companies, starting with 37 tonight, our time, with Apple, the biggest company in the world topping the bill.
In fact Apple’s March quarter figures will hold most of the attention this week (except for the two day US Fed meeting midweek).
Investor interest will centre on the performance of the iPhone 6, and early reports about how sales of the new Watch have gone since it became available last Friday.
As well, investors will be looking for another increase in Apple’s dividends. Analysts expect Apple to deliver revenue of $US56.06 billion, up 23% and boost earnings by around 30% on a year ago
Apple lifted its dividend by 15% in 2013 and 8% last year, and said a year ago that it plans to continue to raise its dividend on an annual basis. So investors will be watching closely for the size of this year’s increase. After the success of iPhone 6, it could be a solid rise.
US analysts expect Apple to be the largest positive contributor to year-over-earnings growth for the information technology sector for March and the second largest positive contributor (after Bank of America) to year-over-year earnings for the entire S&P 500.
"The blended (combines actual results for companies that have reported and estimated results for companies yet to report) for the Information Technology sector is 0.7%. Excluding Apple, the blended earnings growth rate for the sector would fall to -5.1%,” US research group, FactSet.
"The blended earnings decline for the entire S&P 500 is -2.8%. Excluding Apple, the blended earnings decline for the S&P 500 would increase to -3.9%.
"Second, this quarter marks the first quarter in which Apple is expected to report sales numbers for the iWatch. The mean estimate for unit sales for Q1 2015 is approximately 3 million. The mean estimate for dollar-level sales for Q1 2015 is $683 million.
"This amount reflects just over 1% of the total dollar-level sales estimate for Apple for Q1 2015 of $55.9 billion. However, analysts do project iWatch sales to reach more than $5 billion by Q4 2016,” FactSet analysts wrote at the weekend.
Once Apple is out of the way, Big Oil will dominate.
Some of the world’s biggest listed oil companies will reveal the damage the oil price slide and cuts to spending have done to their revenue and earnings.
The impact will be steeper than in the December quarter, and for many companies there will be a lot of red ink as the impact of write-downs in asset value shifts the bottom line.
Among the oil companies reporting are Shell, BP, Exxon Mobil, Chevron, ConocoPhillips, Total, Suncor, Imperial Oil, Whiting Petroleum and the big US oil refiner, Valero.
As well as these companies, the likes of Merck, Pfizer, Bristolmyers, Kraft Foods, Mondelex, Mylan, Northrop Grumman and General Dynamics, Wynn resorts, Ford, Cummins, Revlon, Mastercard, UPS, Time Warner and Time Warner Cable, The New York TImes. Aetna, SupaValu and Genworth.
Offshore the results will pour out of companies in Europe, Japan, China, South Korea and the UK.
These will include ABB, Baidu Inc, Honda, Daimler, Volkswagen, Hino Motors, Samsung Electronics, Nippon Steel, Kobe Steel, Rich, Panasonic, Mitsubishi Electric and Tokyo Electric Power Co.
FactSet says that overall, 201 companies in the S&P 500 have so far reported earnings and revenues to date for the first quarter. “On the earnings side, 73% of the companies have reported actual EPS above the mean EPS estimate and 27% of the companies have reported actual EPS below the mean EPS estimate.
"The percentage of companies reporting EPS above the mean EPS estimate is equal to the 5-year (73%) average.”
"However, on the revenue side, 47% of the companies have reported actual sales above the mean sales estimate and 53% of companies have reported actual sales below the mean sales estimate. The percentage of companies reporting sales above estimates is below the 5-year average (58%).
"In fact, if 47% is the final percentage for the quarter, it will mark the lowest percentage of companies reporting sales above estimates since Q1 2013 (also 47%). Since Q3 2008, the percentage of companies reporting sales above estimates has finished below 50% only six times.
“Due in part to more companies missing sales estimates than beating sales estimates, the blended sales decline is larger today (-3.5%) compared to the start of the quarter (-2.6%).
“On the other hand, due in part to more companies beating EPS estimates than missing EPS estimates, the blended earnings decline is smaller today (-2.8%) compared to the start of the quarter (-4.6%),” according to FactSet.
