Oil, European banks and media giants will dominate the US September quarter earnings reports this week.
Around 100 S&P 500 companies are due to report this week – roughly half the number of last week as more evidence emerged that this season is turning out to be better than expected, thanks to the better than expected flow of revenue and earnings figures from financial companies such as the big US banks.
US earnings are now positive (in a small way) for the quarter so far, according to US research group, FactSet.
Oil giants such as Shell and BP from the UK, Repsol from Spain, Andarko, Devon Energy, Chesapeake and Apache will release their latest figures – the expectation is that like Exxon Mobil, Chevron and Total last week, the bottom lines will be better than forecast by the market.
But the sector where the focus will be greatest is on US media – print and video, in the wake of the proposed $US85 billion offer for Time Warner by AT&T. Time Warner in fact releases its third quarter figures midweek along with 21st Century Fox, Sinclair Broadcasting, Charter Communications, Liberty Global, CBS and AMC Networks.
The New York Times also releases its latest figures mid-week, along with Axel Springer of Germany and tronc of the US. News agency and financial information products group, Thomson Reuters is another down to report this week.
But the most important company to report this week will be Facebook and after the mixed nature of last week’s reports from Amazon and Alphabet (Google) some analysts wonder if Facebook will report a surge in costs as well.
Other tech companies reporting include Qualcomm, Acer, Fitbit, among a host of a smaller groups
European banks, Credit Suisse, Soc Gen and Commerzbank also release their half year figures, as will Swiss Re, the big re-insurer.
Major airlines, Lufthansa, Air France And Singapore are also due to report.
A number of major consumer products companies are also down to report – Clorox, Starbucks, Kraft Heinz, BMW, Hugh Boss, adidas and Molson Coors.
Agri- business giant, ADM also releases its latest figures, along with rival, Bunge. US hardware retailer, Lowes Cos (Woolies former partner in Masters) is another to report.
Meanwhile FactSet says the blended (combines actual results for companies that have reported and estimated results for companies yet to report) earnings growth rate for the S&P 500 is 1.6%, which is above the year-over-year blended decline of -0.5% at the end of last week and the year-over-year estimated decline of -2.2% at the end of the third quarter (September 30).
“If the index reports growth in earnings for the quarter, it will mark the first time the index has seen year-over-year growth in earnings since Q1 2015 (0.5%),” FactSet reported at the weekend.
“What is driving the increase in the earnings growth rate for the quarter?,” FactSet asked.
"In aggregate, the upside earnings surprises reported by S&P 500 companies to date have led to a $10.1 billion increase in earnings for the index since September 30 (as higher actual earnings replace estimated earnings in the growth rate calculation).
"At the sector level, all 11 sectors have contributed to this increase in earnings. However, the Financials sector has been the largest contributor of all 11 sectors to the rise in earnings growth for the index since the end of the third quarter. This sector accounts for $3.6 billion (or 36%) of the $10.1 billion increase in earnings for the S&P 500 since September 30.
FactSet said that in the Financials sector to date, 87% of companies have reported actual EPS above estimated EPS, which is tied for the second highest percentage (with the Information Technology sector) of all 11 sectors. Companies in this sector are reporting earnings in aggregate that are 9.1% above estimates, which is the fourth highest surprise percentage of all 11 sectors.
