By this time next week, more than one-half of the companies in the Standard & Poor’s 500 index will have reported earnings for the three months concluded in December. And to date, the effects of a global commodities rout and a strong U.S. dollar have led to slowdowns in growth in most sectors compared with the final quarter of 2014.
Consumer-discretionary companies, encompassing automakers and media firms, as well as healthcare outfits have reported strong single-digit percentage growth. In addition to the steep declines in the energy and materials sectors, companies in the financial-services and consumer-staples sectors also have reported significant drops in earnings growth in the fourth quarter of last year.
“We fully expected energy and materials earnings to be hideous,” said Bill Stone, executive vice president and chief investment strategist at PNC Wealth Management and PNC Institutional Asset Management. “But setting them aside and looking at the rest, we’ll likely end the season with earnings growth at least in the low single digits.”
Among the S&P 500 companies that had reported as of Thursday, the average year-over-year earnings decline was 6.3 percent. Excluding the hard-hit energy sector, this comparatively large decrease turns into a comparatively small increase of 0.3 percent, according to S&P Capital IQ.
“The only stocks that have stood out so far to me is Facebook and Under Armour, maybe McDonald’s and one or two others,” said Adam Sarhan, founder and CEO of the advisory and investment firm Sarhan Capital. “But on average we don’t have a lot of ‘oomph.’ What we’re seeing now is a classic transition from a bull market to a bear market.”
Delivering financial reports in the coming week are major companies such as Google’s parent Alphabet, the automaker General Motors, the online professional networker LinkedIn and KFC’s parent Yum Brands. Below is a rundown of reports of select companies for the 2015 calendar year’s fourth quarter due out next week, with estimates provided by analysts polled by Thomson Reuters and stock-price movements based on market-closing levels Friday.
Monday (After Market Close)
When Alphabet Inc. (NASDAQ:GOOGL) reports its 2015 full-year and fourth-quarter results, investors will want to see whether the company formerly known as Google managed a stellar rise in revenue comparable with that seen in Facebook Inc.’s recent financial report. It’s one of the so-called FANG stocks (along with Facebook, Amazon.com Inc. and Netflix Inc.) whose share prices soared in 2015 while almost all other equities either declined or eked out small gains. The firm will be delivering its first earnings report under its new name and multisubsidiary structure anchored by its main moneymaker, Google.
Analysts polled by Thomson Reuters expect $6.54 in unadjusted earnings per share on $4.56 billion in profit in the fourth quarter, up from $6.91 in EPS on $4.76 billion in profit. Revenue is expected to increase to $20.76 billion from $18.10 billion in the year-ago quarter. Alphabet’s stock is up 46 percent during the past 12 months and down about 4 percent since the beginning of this year.
Tuesday (Before Market Open)
Like other retailers, the apparel and footwear maker Michael Kors Holdings Ltd. (NYSE:KORS) is emerging from one of the weakest U.S. holiday shopping seasons since the Great Recession. Expectations for retailers in general are low, and Michael Kors has been struggling with brand saturation, so don’t expect much upside surprise for the London-based fashion brand’s fiscal third quarter earnings.
Analysts expect the company to report unadjusted earnings per share of $1.47 on $277.1 million in profit for the three months ending in December, down from $1.48 per share on profit of $303.7 million. Revenue is expected to rise to $760.5 million from $689.4 million. Stock in the company has fallen about 44 percent over the past 12 months and about 3 percent since the start of the year.
• After a dismal end to 2014, investors will want to know if United Parcel Service Inc. (NYSE:UPS) got 2015’s peak U.S. holiday shopping season right when it reports fourth quarter and full-year results. The world’s largest delivery service has been investing heavily in revamping its logistics hubs, including increasing automation over the past year. But like rivals FedEx and DHL, it could soon be facing a considerable threat from Amazon.com, which is moving into global package delivery.
The Atlanta-based company is expected to report unadjusted per-share earnings of $1.42 on $1.28 billion in profit, up from 49 cents per share on profit of $453 million in the same period the previous year. The company had one-time charges related to pension obligations at the end of 2014. Adjusted to exclude special items, UPS earned $1.25 per share on $1.15 billion in profit at the end of 2014. UPS stock is down about 12 percent over the past 12 months and down about 5 percent since the start of the year.
Tuesday (After Market Close)
Chipotle Mexican Grill, Inc. (NYSE:CMG) was pummeled by E. coli and notovirus outbreaks in the last months of 2015, so expect the Denver, Colorado-based “fast casual” restaurant chain to address the revenue-crippling food-safety scandal in its fourth quarter and full-year earnings report. Company CEO Steve Ells said last week at a conference in Orlando, Fla., that 2016 would be “messy” for earnings.
Restaurant analysts expect Chipotle Mexican Grill to earn an unadjusted $1.87 per share on $60.7 million in profit in the last three months of last year, down from $3.84 per share on profit of $121.2 million in the same period in the previous year. Revenue is expected to shrink to $1 billion from $1.1 billion. Chipotle shares are down about 36 percent for the past 12 months and about 6 percent since the start of the year.
• Yahoo! Inc. (NASDAQ:YHOO) is under intense pressure from activists to do something about years of revenue declines, even as rivals Google and Facebook are reaping bounties from the growing mobile ad business. It's also facing a possible massive $10 billion tax bill related to the search engine’s stake in China's Alibaba Group. Yahoo CEO Marissa Mayer is working on a major overhaul of the company, and this will be the dominant theme of the company’s fourth quarter and full year 2015 earnings report.
Analysts expect Yahoo to report unadjusted earnings per share of 4 cents on $37.3 million in profit in the fourth quarter, down from 17 cents per share on profit of $166.3 million in the same period the previous year. Revenue is expected to rise to $1.19 billion from $1.18 billion in the year-ago period. Yahoo stock is down about 41 percent over the past 12 months and down about 14 percent since the start of the year.
Wednesday (Before Market Open)
Benefitting from Americans’ ravenous demand for trucks and SUVs, General Motors Company (NYSE:GM) has seen steady sales growth despite challenges to the industry in South America and Europe. GM is also one of the largest foreign automakers in China, the world’s largest auto market, were it has nearly a dozen joint ventures. Like its American rival Ford, GM has dipped more deeply into the industry’s future-of-mobility movement, most recently by forming a special division to speed up development of self-driving and electric cars.
Analysts forecast fourth-quarter 2015 unadjusted earnings for the world’s third-largest automaker to come in at $1.90 billion, or $1.21 per share, up from $1.12 billion, or 66 cents per share in the last three months of 2014. Charges related to GM’s ongoing ignition switch recall scandal and European restructuring hit GM’s bottom line at the end of 2014, which helps explain the big jump in profit expected for the last three months of 2015. Revenue is expected to drop to $38.07 billion in the fourth quarter, from $39.62 billion in the same period last year. GM stock is down about 11 percent over the past 12 months and down about 13 percent since the start of the year.
• Even before China’s slowdown in recent months, Kentucky-based fast-food giant Yum! Brands, Inc. (NYSE:YUM) had been struggling in the world’s most important emerging market for global restaurant chains. The company doled out a serving of confidence when it announced same-stores sales had grown 2 percent in China in the fourth quarter, led by gains in its core KFC brand and despite drops in Pizza Hut traffic. The company plans to spin off its China division into a separate publicly traded company that will have exclusive rights to the company’s three brands, including Taco Bell. In a bid to spice up sales in the U.S., KFC will soon rolling out Nashville Hot Chicken nationwide after a successful test of the new menu item in Pittsburgh.
The company is expected to report fourth-quarter unadjusted earnings of 65 cents per share on $290 million in profit, up from a losses of 20 cents per share and $86 million in the same period the previous year when it took a one-time charge for poor performance of Little Sheep, a Mongolia-based company that manages hot pot restaurants Yum Brands bought in 2011. Revenue is seen rising slightly to $4.02 billion in the fourth quarter, up from $4.00 billion in the year-ago period. Yum stock is down about 3 percent over the past 12 months and about 1 percent since the start of the year.
Wednesday (After Market Close)
GoPro Inc (NASDAQ:GPRO), the maker of wearable cameras that went public in 2014, already warned that its fourth-quarter revenue would be much lower than expected and that layoffs were in order, news that hammered the California-based company’s stock down nearly 30 percent. Now investors will want an update on the company’s progress toward its first consumer flying camera drone, the GoPro Karma, expected out in the fall, and whether the release of the next-generation GoPro Hero 5 camera will be delayed.
Analysts expect GoPro to post losses in the quarter ending in December of $12 million, or 10 cents per share, compared to profit of $122.1 million, or 83 cents per share in the same quarter of 2014. Revenue is expected to drop to $499.2 million, from $633.9 million. Company stock is down about 78 percent over the past 12 months and down about 37 percent since the start of the year.
Thursday (Before Market Open)
Dunkin Brands Group Inc (NASDAQ:DNKN) is emerging from a disappointing year as its international operations falter. The company recently announced new efforts to kick start U.S. sales, which account for about 85 percent of group revenue, including from its Baskin-Robbins ice cream brand. Dunkin’ Donuts will soon add healthier menu items, and a partnership announced last month with Manhattan’s indoor arena Madison Square Garden will give it a venue for national televised visibility. Like its main rival Starbucks, Dunkin Brands is also experimenting with home delivery and mobile payments, so expect to hear more about that when the company announced its fourth quarter and full-year results.
Wall Street expects the Canton, Massachusetts-based company to report unadjusted earnings of 47 cents per share on $44.91 million in profit in the three months ending December, down from 50 cents per share on $52.5 million in profit in the same period the previous year. Revenue is expected to rise to $203.3 million from $193.2 million.
Thursday (After Market Close)
It’s been about seven months since LinkedIn Corp (NYSE:LNKD) finalized its $1.5 billion purchase of online educator Lynda.com, so the professional networker should provide some further insight into whether it’s successfully leveraged the acquisition when it reports fourth quarter and full-year results. In October the company agreed to pay $13 million to settle a class-action lawsuit over sending too many emails to users’ contacts. Aatif Awan, the company's senior director of product management, acknowledged last year that LinkedIn send so many messages to users that it’s become a running joke among late-night talk show hosts. Since then, the company’s has promised to scale back on the email nudging.
The company’s Lydia acquisition and other growth investments, especially globally, have impacted its profits over the past year. Forecasters expect a quarter of losses when factoring these investments. The company is expected to report a fourth consecutive quarter of negative performance, with losses of 34 cents per share on $47.9 million, compared to a gain of 2 cents per share on $3.0 million in profit. Revenue is the bright spot as analysts expect a rise to $857.6 million from $643.4 million.
Friday (Before Market Open)
Tyson Foods, Inc. (NYSE:TSN), a staple of the U.S. grocery-store meat aisle, has been in a yearlong effort to expand its prepared food segment, which includes its Jimmy Dean sausage, Ball Park Franks and Hillshire Farms sausage, which it acquired in 2014. The effort by a company largely known for its raw poultry and beef products has led to a near doubling of the size of its prepared food operations, which now represent over 18 percent of its business, up from about 10 percent in 2014, according to its regulatory filings. Prepared food offers higher profit margins for one of the world’s biggest meat producers.
Analysts expect the Springdale, Arkansas-based company to report unadjusted earnings per share of 91 cents on $365.6 million in profit for the three months ending in December, up from 74 cents on $309.0 million in the same period the previous year. Revenue, however, is seen dropping to $10.1 billion, from $10.8 billion.