More than 300 of the companies in the S&P 500 have reported their end-of-year performance, and as expected, earnings growth was lower than it was at the end of 2014. But for companies that do most of their business at home in the United States, the end of 2015 was more generous to their bottom lines.
Consider it the home field advantage.
As of Thursday, the country’s largest companies had reported an average 5 percent drop in year-over-year profits, led by an ominous 74 percent plunge in energy-related companies. Meanwhile, makers of construction materials, chemicals and shipping containers had seen earnings drop by nearly a fifth.
Nearly every big American company has pointed to the same factors: a strong U.S. dollar and plunging oil prices. Weakness in China’s economy also has rippled through emerging markets and sent the price of everything from wheat to iron ore plunging.
“There’s not a lot of surprise in the areas of that have been disappointing. Expectations were low for energy and materials,” said Eric Wiegand, senior portfolio manager at U.S. Bank Wealth Management. “The companies are commenting on the same themes: a strong dollar, low commodity prices, concerns over global demand. The strong dollar is a big issue. Large multinationals are talking about mid- to high-single-digit impacts on their revenue.”
For example, Procter & Gamble Chief Financial Officer Jon Moeller said in his company’s fiscal-second-quarter conference call last month that the dollar’s strength led to a $1.5 billion loss in after-tax profit in P&G’s previous fiscal year.
This means companies that sell their goods and services in the U.S. are faring better than the ones with a lot of their sales generated overseas. This U.S.-centricity has become a major theme for the fourth quarter of 2015.
Four of the 10 sectors that reported year-over-year earnings growth in the last quarter are heavily reliant on the U.S. economy rather than global economic activity. This includes biotech and medical device manufactures, as well as producers of consumer discretionary goods, including auto parts, leisure products and retailers that order goods made abroad.
Delivering financial reports in the coming week are major media companies Walt Disney, Twenty-First Century Fox and Time Warner. Soda giants Coca-Cola and PepsiCo will also provide the latest updates on their activities.
Below is a rundown of reports expected next week from select companies for the 2015 calendar year’s fourth quarter, with estimates provided by analysts polled by Thomson Reuters and stock price movements based on market closing levels Thursday.
Hasbro Inc. (NASDAQ:HAS) should have had a decent fourth quarter considering its lucrative toy license for “Star Wars: The Force Awakens,” which came out ahead of the holiday season. With a rumored merger in the works that would marry the world’s biggest toy makers, Hasbro and Mattel Inc. (maker of Barbie dolls and Hot Wheels cars), expect a lot of attention to be paid to the company’s earnings.
Hasbro will report fourth-quarter and full-year results Monday morning before markets open in New York. The company is expected to post net income of $1.30 per share on $164.6 million in profit in the last three months of 2015, down from $1.34 per share on profit of $169.9 million in the same period the previous year. Revenue is expected to increase to $1.37 billion, up from $1.3 billion in the previous year.
Hasbro’s shares have gained about 34 percent in value over the past 12 months, and more than 11 percent since the start of the year.
• Presidential primary debates late last year should have had a positive impact on Twenty-First Century Fox Inc. (NASDAQ:FOXA). Fox News has seen a massive spike in viewers in a series of debates and a crowded field of Republican contenders. The media conglomerate also owns lucrative TV shows like “American Horror Story” and “Modern Family.”
The New York-based media and entertainment company will report its fiscal-second-quarter results on Monday after markets close. Analysts expect the company to report net income of 44 cents per share on $867.3 million in profit in the quarter ending in December, down from $2.89 per share on $6.2 billion in profit.
The huge drop is related to proceeds from the sale of Sky Italia and Sky Deutschland in November 2014. On an operating basis that excludes special items, the company earned 53 cents per share, or $1.13 billion in profit, on $7.4 billion in revenue in the last three months of 2014.
Twenty-First Century Fox shares have dropped about 23 percent over the past 12 months and about 6 percent since the start of the year.
• Yelp Inc. (NYSE:YELP) has been struggling with the larger move away from desktops to mobile phone screens. Chief Executive Jeremy Stoppelman pulled back from exploring a sale of the company last year, and instead he boosted his advertising sales force. Like other web-based operations, Yelp needs to wean itself off increasingly ineffective national banner ads and start showing revenue from localized businesses.
The San Francisco-based business directory and online review platform will report progress in this regard in its fourth-quarter and full-year results Monday after markets close. Analysts expect the company to report losses of $2.7 million and 3 cents per share in the three-month period through December, down from a gain of 42 cents per share on profit of $32.7 million in the year-earlier period. Revenue, however, increased to $152.4 million from $109.9 million.
Yelp shares have plunged about 69 percent over the past 12 months and are down about 37 percent for the year.
Atlanta-based Coca-Cola Co. (NYSE:KO), the world’s largest beverage company, has been on an aggressive cost-cutting program that it began last year by shedding nearly 1,800 company executives, about 14 percent of the company’s leadership corps. The company is also highly exposed to the head winds of a strong U.S. dollar that have battered profits in foreign-currency sales. And all of this is occurring as the world grows wiser to the ill effects of high sugar consumption.
Coca-Cola will report its fourth-quarter and full-year results Tuesday morning. The world’s largest beverage company is expected to report 37 cents per share on $1.64 billion in profit for the last three months of 2015, up from 17 cents per share on $770 million in the year-earlier period, which included significant one-time charges related to restructuring.
Coca-Cola’s share price has gained about 2 percent over the past 12 months and has lost about 1 percent since the start of the year.
• For Walt Disney Co. (NYSE:DIS) the last three months of 2015 was all about “Star Wars: The Force Awakens,” the seventh chapter in the sci-fi epic and the first under Disney ownership after it bought the franchise from LucasFilm for $4 billion in 2012. When the company reports its fiscal-first-quarter results Tuesday after markets close, expect to hear a lot about how the $200 million film fared globally. Also expect an update on revenue and affiliate fees from its ESPN network, which has been battered by the cord-cutting trends.
The Burbank, California-based media giant is forecast to post earnings per share of $1.45 on $2.37 billion in profit in the three months ending in December, up from $1.27 on $2.18 billion in the same quarter of the previous year. Revenue is seen rising to $14.77 billion from $13.39 billion.
Disney’s share price has dropped by about 8 percent over the past 12 months and about 11 percent since the start of the year.
When Panera Bread Co. (NASDAQ:PNRA) reports its fourth-quarter and full-year results Wednesday before markets open, look to see if the Missouri-based bakery-café chain benefited from Chipotle Mexican Grill's disastrous fourth quarter, linked to its E. coli outbreaks that hammered customer traffic numbers. Chipotle's loss might have been the gain of other fast-casual restaurant chains in the last quarter.
Analysts expect Panera to report earnings per share of $1.82 on $45.2 million in profit in the last three months of 2015, compared with per-share earnings of $1.82 on $48.49 million in the same three months in the previous year. Revenue is expected to rise to $695.4 million from $672.9 million.
• Now that wind and solar power energy credits have been extended for five years, San Mateo, California-based solar power services provider SolarCity Corp. (NASDAQ:SCTY) won’t face a loss of green-power incentives for the time being. But it still faces troubles in some states, most recently in Nevada, that charge rooftop fees to solar customers. SolarCity, co-founded by Tesla and SpaceX magnate Elon Musk, is bleeding cash and engaged in aggressive cost cutting.
The country’s largest rooftop solar installer will report fourth-quarter and full-year earnings after markets close in New York Wednesday. The company losses are expected to widen to $1.60 per share and $120.3 million from 4 cents per share and $3.6 million. Revenue is expected to grow to $105.6 million from $71.8 million.
SolarCity’s stock price has lost about 45 percent of its value over the past 12 months and about 40 percent since the start of the year.
• Like Twenty-First Century Fox, New York-based media and entertainment company Time Warner Inc. (NYSE:TWX), which owns CNN, likely saw a big boost to ratings thanks to the widely watched presidential primary debates. Speculation abounds that the company could merge or be bought, possibly by Apple or AT&T, both of which would benefit from the company’s media assets. It could also buckle to investor pressure to spin off its lucrative HBO network.
Time Warner will report fourth-quarter and full-year results Wednesday before markets open. Analysts see the company posting per-share earnings of $1.03 on $811.8 million in profit in the last three months of 2015, up from 84 cents per share on profit of $718 million. Revenue is expected to be flat at $7.53 billion for both quarters.
Time Warner’s shares have lost about 14 percent over the past 12 months but have gained 7 percent since the start of the year.
• Luxury electric car maker Tesla Motors Inc. (NASDAQ:TSLA) of Palo Alto, California, sold about 50,000 cars last year, about a tenth of what it wants to be delivering by the end of 2020. The Model X sport utility vehicle began rolling out to customers in September but at a slower pace than expected. This year the company aims to ramp up delivery of the X and says it will show the world the sub-$40,000 Model 3 in March, due for delivery to customers by 2017. That, along with progress in its multibillion-dollar “gigafactory” battery plant in Nevada, a continued rollout of Tesla charging stations and efforts to boost sales in China amid an economic slowdown, are also in the works.
With all of that going on, the world’s most watched recent automotive startup will report fourth-quarter and full-year results after markets close in New York Wednesday. Analysts expect the automaker to post a loss of $2.2 million and a gain of 2 cents per share, up from a losses of $107.6 million and 86 cents per share. Adjusted net income, which takes out revenue from the way it accounts for leases and stock-based compensation, is expected to be $24.2 million, or 10 cents per share, up from a loss of $16.2 million, or 13 cents per share. Revenue is expected to grow to $1.8 billion from $1.1 billion in the last three months of 2014.
Tesla’s stock price has fallen about 20 percent over the past 12 months and about 33 percent since the start of the year.
PepsiCo Inc. (NYSE:PEP) has a market share that’s half its main rival, Coca-Cola, but its strength against its main rival is it depends less on its namesake sugary carbonated beverage. Unlike Coca-Cola, PepsiCo’s portfolio includes a lot of well-known snacks like Sabra hummus and Lay’s potato chips, as well as Quaker Oats. But like Coca-Cola, PepsiCo’s global footprint means profits earned in foreign currencies have been hammered by a strong U.S. dollar.
Purchase, New York-based PepsiCo will report its fourth-quarter and full-year results Thursday morning. Analysts expect food and drink giant to post per-share earnings of $1.05 on $1.56 billion in profit in the last three months of 2015, up from 87 cents per share on profit of $1.3 billion.
PepsiCo’s share price has gained about 4 percent over the past 12 months and has lost about 3 percent since the start of the year.