Equities »Earnings season starts this week

This week’s trading results: US banks, Tesco and ASOS

Get ready for a busy week on the stock market which will see the start of the US earnings season with results expected by US banks, Delta Air Lines and Bed Bath & Beyond, while Tesco and ASOS will lead the UK calendar poster.

Corporate earnings calendar: 11-15 April 2022

After a few quiet weeks on the corporate calendar, next week things will pick up speed as the US earnings season officially kicks off, starting with US banks on Wednesday and Thursday. Meanwhile, in the UK we will also see results from ASOS and Tesco. Below is an overview of the best earnings to watch next week:

Tuesday 12th April

Wednesday 13 April

  • Tesco
  • JP Morgan
  • Black rock
  • Delta Airlines
  • Bath to bed and beyond

Thursday 14th April

  • Goldman Sachs
  • Morgan Stanley
  • Wells Fargo
  • American bank
  • TSMC

ASOS

ASOS, which has been looking for a new CEO for six months, will report its weakest ever sales growth when it reports results for the half-year through the end of February, although it will exceed £ 2 billion for the first time in only six months. -period of one month.

Pre-tax profit is expected to decline by more than 90% as supply chain problems and rising costs impact profitability and are further impacted by increased capital spending. ASOS said it expects a significantly better second half, but has already acknowledged that profits will decline this year.

Tesco

The UK’s largest supermarket, Tesco, is expected to see revenue growth of 5.7% in the 12 months to the end of February to £ 61.2 billion and adjusted EPS is expected to rise 80% to 21. 78 pence. This improvement is due to cost reductions due to Covid-19 and the normalization of trade, but, having successfully overcome the pandemic, Tesco and the industry in general are now grappling with a new inflationary pressure that is driving up food prices.

Tesco outperformed rivals Sainsbury’s, Asda and Morrisons and is the only major player to successfully compete against German discounters Aldi and Lidl, but its size and purchasing power should allow it to maintain its huge advantage over its own. rivals even if things get complicated in 2022 and acquisitions are also expected to continue to grow as Tesco has scaled back spending plans since retiring from most international markets in recent years.


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JP Morgan

JPMorgan officially kicks off its US earnings season with first quarter results this week. Managed revenue is projected to increase 6.1% year-over-year to $ 31.1 billion, but EPS is expected to fall more than 39% to $ 2.73 after a bumper year of earnings the previous year , when the results were boosted by the timely releases of Covid-19 loan provisions and improved performance in its commercial and investment branches, which are now normalizing.

US banks see profitability improve if interest rates rise as expected this year, but meanwhile the focus is on how to keep costs down as spending increases across the industry, which should seriously hurt the profitability of the industry. JPMorgan in the first quarter. JPMorgan is also significantly increasing its investments in technology and other projects such as its expansion into the UK retail banking sector, which investors will want to know more about this week.

You can read the full preview before JPMorgan results here.

Black rock

BlackRock will also release its first quarter results this week. Wall Street expects BlackRock to see revenues rise 10.3% yoy to $ 4.85 billion after announcing record assets under management and strong net inflows (boosted by ETFs) during the previous quarter, putting it in a position of strength to increase its revenues in early 2022. Adjusted EPS is expected to rise 16.4% to $ 9.04. However, this year’s profitability will be closely monitored as it raises the level of investment, absorbs higher costs and increases its workforce.

Bloomberg analysts believe BlackRock will increase redemptions to $ 1.5 billion in 2022 from $ 1.2 billion returned in 2021. Consensus data suggests BlackRock will see its slowest EPS growth in three years in 2022 by only 5. %.

Delta Airlines

Delta Air Lines is expected to release first quarter results this week as the travel industry struggles to recover from the pandemic. It said the capacity will continue to operate from 83% to 85% of pre-pandemic levels in the first quarter, bringing revenue from 72% to 76% of what is seen in 2019. Delta Air Lines has delivered two sets of quarters of Positive adjusted EPS, but Wall Street thinks this will end with guidance indicating an adjusted loss per share of $ 1.27 for the quarter, although it is less than the $ 3.55 loss seen last year. Intense price competition, shrinking capacity and rising costs are all weighing on the entire industry, although equity investors are hoping demand has improved since restrictions on international travel were eased in 2022. With this in mind, Delta Air Lines is likely to continue burning money.

Bath to bed and beyond

It’s been another tough year for home, baby and wellness retailer Bed Bath & Beyond, which is expected to see a 20% drop in sales to $ 2.08 billion and a 71% drop in EPS. adjusted to $ 0.12 when reporting fourth quarter results. The board is currently leading a multi-year turnaround plan that includes streamlining its store network, expanding online and expanding its product selection.

The excitement has recently reignited after Ryan Cohen, founder of online pet food store Chewy and chairman of the turnaround of video game retailer GameStop, bought a 9.8% stake in the company. This has led to several new additions to the board that have brought in new faces from companies like Walmart, Stitch Fix, and IKEA. Equity investors will be keeping an eye on the outlook for the current fiscal year, with analysts currently expecting the company to return to earning.

Goldman Sachs

Goldman Sachs follows Thursday with first quarter results. Wall Street expects net revenues to decline 33% year-on-year to $ 11.9 billion, while EPS is expected to halve to $ 9.01 from $ 18.60 a year earlier. The significant declines come after the previous year’s result was driven by record revenues from its investment banking and equity underwriting businesses.

Goldman Sachs is the world’s leading M&A advisor and has therefore reaped the rewards of the flurry of activity seen in the market last year, but this is normalizing as operations and IPOs in equity markets have calmed down in 2022 in a market environment uncertainty. The fact that costs have risen faster than expected in the previous quarter will make this a priority area for investors this week.

Morgan Stanley

Morgan Stanley is expected to experience its first quarterly revenue decline since the start of the pandemic when it reports its first quarter results as it collides with difficult comparisons of record numbers delivered last year. Net revenue is expected to fall 8.7% yoy to $ 14.35 billion, while Adjusted EPS is expected to fall 20% to $ 1.75.

The return on tangible equity improved significantly last year and came out in 2021 at 19.8%, but is expected to drop to 16.7% when it carries over this week, marking the lowest level in five quarters. , as it also struggles with rising costs and the need to invest in technology-driven initiatives, although its decision to gain an advantage using mergers and acquisitions should reduce the need to increase investment budgets.

Wells Fargo

Analysts expect Wells Fargo will see first quarter revenue drop 1.5% to $ 17.8 billion in the first quarter and EPS will drop nearly 24% to $ 0.80. It also faces tough comparisons with last year, when the first quarter saw the most dramatic increase in profits.

On the positive side, the bank’s net interest margin is expected to improve sequentially for the third consecutive quarter, bolstering confidence. Profitability can remain resilient when paired with an outlook that points to a 4% drop in costs this year. This is supported by expectations that the higher costs will be absorbed by continued efficiency improvements. This should put it in an even stronger position if profitability is boosted by higher interest rates this year.

American bank

US Bancorp is expected to post a 1.8% increase in revenue to $ 5.56 billion in the first quarter, while EPS is expected to fall more than 34% to $ 0.95, thanks in part to the decline in revenues. one-off Covid-19 loans. The bank is expected to be a big beneficiary of the interest rate hike this year, but in the meantime it may struggle to raise profits.

A seasonal slowdown in payment revenue, coupled with weaker mortgage demand, is expected to hurt fees, offset by higher lending and better profitability than in the fourth quarter.

TSMC

We already know that chip maker TSMC saw its net revenue increase 35.5% in the first quarter to NT491.0 billion, which was above expectations and marked the fastest quarterly growth seen in two years, which it’s all the more impressive since it’s generally a quieter environment. period for the company. This suggests that the company could beat earnings forecasts, with analysts forecasting a 32% year-on-year increase in EPS diluted to NT 7.14.

Particular attention will be paid to TSMC’s spending plans after announcing that its capital budget will be between $ 40 and $ 44 billion this year as it seeks to compete with the likes of Intel and Samsung as the industry grows to provide the next generation of technology.

By Joshua Warner, FOREX.com »Official site

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Disclaimer: The information and opinions contained in this report are provided for general information purposes only and do not constitute an offer or solicitation to buy or sell any forex or CFD exchange contracts. Although the information contained herein has been obtained from sources believed to be reliable, the author does not guarantee its accuracy or completeness and assumes no responsibility for any direct, indirect or consequential damages that may arise from the fact that someone relies on such information.

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