Before the earnings season began earlier this month, Wall Street forecasts predicted more than a 5 percent drop in earnings for the U.S. companies across the S&P 500 Index. But after Google parent Alphabet, Microsoft and Amazon.com reported progress in core areas of their businesses, helping drive tech sector shares skyward Friday, the outlook for third-quarter corporate performance has improved, albeit on lower expectations.
“We’re getting the news that the third quarter will be better than expected,” said Bill Northey, chief investment officer at the private client group at U.S. Bank. “We have some crucial earnings coming up with companies that have more international exposure, but the positive surprises we’ve seen this week will portend well for the rest of the earning season.”
U.S. company earnings are now estimated to have dropped in the third earnings season of the year by an average of about 3.8 percent, led by steep declines in energy and commodities, according to S&P Capital IQ. Consumer goods makers and telecommunications companies are leading gains. Overall, U.S. corporate earnings are still shrinking, but not a deeply as initially expected. Still, the numbers are showing that large U.S. companies could report their first declines in both profit and revenue since the Great Recession.
China’s economic slowdown has curbed demand for everything from iron ore to luxury handbags. Meanwhile a strong U.S. dollar – up 15 percent against the world’s other major currencies compared to this time last year – has driven down the value of international sales for U.S. multinationals. And the energy sector is still struggling with a global supply glut.
While third quarter earnings season is turning out to be not as bad as initially expected, the most crucial trend so far is that companies are lower their earnings expectations for both the fourth quarter and the year, said Northey.
This week will see earnings reports from some major companies, including Apple, Ford Motor, Starbucks and United Parcel Service. Here’s a rundown of select companies earnings for the July-to-September period due out this week:
Ford Motor Company (NYSE:F) will report on Tuesday before markets open. The global automaker is expected to have earned revenue of $35.07 billion, up 6.9 percent from the same quarter last year, according to analysts polled by Thomson Reuters. Unadjusted net profit is expected to be $1.85 billion, or 48 cents per share, up from 847 million, or 21 cents per share. Ford Motor Company is trading around $15.66 a share and the stock has gained 1.1 percent for the year.
Apple Inc. (Nasdaq:AAPL) will post its latest earnings on Tuesday after markets close. The iPhone maker is forecast to report quarterly revenue of $51.11 billion, up 21.3 percent from the same period last year. Unadjusted net profit is expected to be $10.72 billion, or $1.88 per share, up from $8.47 billion, or $1.42 per share. Apple Inc. is trading around $119.08 a share and the stock has gained 7.9 percent for the year.
General Dynamics Corporation (NYSE:GD) will report earnings before markets open on Wednesday. The aerospace defense giant is seen reporting $7.84 billion in revenue, up from $7.75 billion in the same period last year. Unadjusted net income is expected to be $689 million, or $2.12 per share, down from $696 million, or $2.06 per share. General Dynamics is trading at around $148.28 a share. So far this year, the stock has gained 7.75 percent.
Yelp Inc. (NYSE:YELP) will report it recent quarterly earnings after markets close on Wednesday. The Internet company operating a website with local search, social networking and discounted deal content is expected to report revenue of $141.4 million, up from $102.5 million in the same period last year. Yelp Inc. is forecast to swing from a gain of $3.6 million, or 3 cents per share, to a loss of $6.2 million, or a loss of 9 cents per share. Yelp Inc. is trading at around $22.56 per share. So far this year, the stock has lost nearly 59 percent.
GoPro Inc. (Nasdaq:GPRO) will post its earnings after markets close on Wednesday. The maker of wearable cameras and accessories is expected to report revenue of $433.6 million for the quarter, up from $280.0 million in the same period last year. Unadjusted net income is forecast to be $30.9 million, or 19 cents per share, up from $14.6 million, or 10 cents per share last year.
Johnson Controls Inc. (NYSE:JCI) will announce its earnings on Thursday before markets open. The maker of automotive interiors and HVAC systems for buildings is expected to report $8.8 billion in revenue for its recently ended quarter, down from $10.98 billion in the same July-September period last year. Unadjusted net income is forecast at $675.2 million, or $1.02 per share, up from $309 million, or 46 cents per share. Johnson Controls Inc. is trading at around $45.01 a share. So far this year, the stock has lost 6.89 percent.
ConocoPhillips (NYSE:COP) will report earnings before markets open on Thursday. The oil giant is expected to report $8.11 billion in revenue, down from $12.92 billion in the year-ago period. The company is forecast to report an unadjusted loss of $330.0 million, or a loss of 30 cents per share, down from a gain of $2.70 billion, or $2.17 a share, in the July-September period of last year. ConocoPhillips shares are trading around $54.60. The stock has shed nearly 21 percent of its value since the start of the year.
Starbucks Corporation (Nasdaq:SBUX) will report earnings after markets close on Thursday. The roaster, marketer and retailer of specialty coffee in the world is forecast to report $4.9 billion in revenue, up from $4.18 billion in the year-ago period. Unadjusted net profit is expected to be $649.5 million, or 42 cents per share, up from $587.9 million, or 39 cents per share. Starbucks Corporation shares are trading around $62.61. Starbucks shares have gained nearly 53 percent since the start of the year.
LinkedIn Corp. (NYSE:LNKD) will report its latest quarterly earnings on Thursday after markets close. Analysts anticipate the professional networking site to post $755.6 million in quarterly revenue, up nearly 33 percent from $568.3 million in the same period last year. The company is expected to post a wider loss of $90.5 million, or a loss of 69 cents per share, compared to a loss of $4.3 million last year, or a loss of 3 cents per share. LinkedIn Corp. is trading around $210.44. The company’s stock has lost 8.4 percent since the beginning of the year.