The flow of March quarter earnings reports ramps up this week highlighted by results from Netflix and a handful of major airlines which will show the extremes of the impact of the pandemic on American business.
Around 500 US companies are down to release reports, around 100 S&P 500 groups.
After the first week’s results (dominated by the major banks and their sharp falls in profit as well as billions of dollars in loan loss provisions) estimates for first-quarter profits have worsened: Analysts expect overall S&P 500 profits to drop by 12.8%, according to Refinitiv – a far steeper decline than the 4.7% drop projected as of April 1.
Earnings are expected to fall 13.6% this year before rebounding 22.8% in 2021, according to Refinitiv.
The results though this week will show a steep fall in revenues and earnings for the airlines along with a group of small to medium regional and local banks.
Delta, American, and Southwest all report this week and there will be plenty of red across all three.
Outlook and earnings guidance will be muted to non-existent.
Oil services giant, Schlumberger gave a big hint on Friday of the financial damage ahead for energy-related companies with a huge first-quarter loss after a massive write down.
Schlumberger reported an $US8.5 billion charge to earnings as the world’s top oilfield services provider slashed the value of some of its businesses following the collapse of oil prices.
The impairment charge led the company to report a net loss of $US7.38 billion for the first quarter to March 31, compared with a profit of $US421 a year earlier.
Its rival Halliburton reports this week as does the smaller Baker Hughes GE – both are now expected to reveal multi-billion dollar losses.
Streaming giant, Netflix reveals its March quarter figures after trading ends at 6 am Sydney time on Wednesday.
It, along with Amazon, are the two stocks investors are most eager to see report their March quarter figures as they are seen as the two companies that are best placed to ride out the damage (along with huge retailer, Walmart).
Netflix, saw its shares rise 2.9% to $US439.17 at the close for a record close on Thursday. It touched an all-time high of $US449.52 in trading.
But on Friday, the shares turned down, losing 6.7% to close at $US417.50, still up nearly 31% for the year so far.
Its strength is easy to understand – lockdowns and isolation/quarantining has boosted TV viewing of all types, and especially streaming. And it doesn’t depend on advertising for a revenue/earnings source like Apple, Facebook and Google do to varying degrees.
Airlines led by giants, Delta, American and Southwest, along with smaller rival, Alaska are due to revealed quarterly figures this week and they won’t be pretty nor will their outlooks if a letter to United staff from the CEO Oscar Munoz said on Friday revealed. He said the airline had cut its flying by 68% in April and was looking at cuts of 90% for May.
Mr. Munoz said there had been a 97% fall in passenger numbers so far in April. “To help you understand how few people are flying in this environment, less than 200,000 people flew with us during the first two weeks of April this year, compared to more than 6 million during the same time in 2019, a 97 percent drop.”
Besides Halliburton. Netflix, and the airlines. other companies due to report this week include Lockheed Martin, Verizon and AT&T, T Mobile, Freeport McMoRan, Eli Lilly, CSX, Texas Instruments, Snap, and Coca Cola.
