The earnings season is well underway at this point, and this week will feature more big-name stocks reporting numbers for their most recent quarter.
So far the earnings season has been a good one, and big names in technology and payment processing will look to continue the streak with their reports this week. Earnings growth has slowed, but Wall Street has looked past that reality and the major indexes remain near all-tie highs.
While overall economic conditions remain favorable, there are still a lot of unknowns that could jeopardize the current bull market which is why every quarterly report holds a lot of weight not only for the stock’s owners, but the entire investing universe since any positive or negative report could ripple across the overall market.
Here are a few of the big names reporting this week that could help drive the market higher, or lead to a broader sell off on disappointing results.
iPhone maker Apple (AAPL) reports its second-quarter numbers after the maker close Tuesday. Apple is a closely watch stock, and its success or failure will have a ripple effect across the entire market. Apple has stopped breaking out unit sales of its highly popular iPhone, but analysts will still pay close attention to total iPhone sales and that figure will drive the stock following the report. Apple endured a big sell off during the final quarter of 2018 but enthusiasm returned to the stock at the start of 2019 and share have rebounded 30% since the start of the year. AAPL remains an attractive value with a forward P/E of just 16 and analysts see earnings growth of 13% per annum over the next five years. For the most recent quarter analysts expect earnings of $2.37 per share on revenue of $57.6 billion, versus $2.73 and $61.1 billion during the same period last year. While earnings will almost certainly be lower year over year, the street expects a positive earnings surprise with a whisper number of $2.47. Analysts have an average price target of $206.54 on the stock.
Chip maker Qualcomm (QCOM) recently gapped significantly higher on news that the company has settled its legal battle with iPhone maker Apple (AAPL) that instantly added around $30 billion to the stock’s market cap. The settlement will lead to higher royalty payments and reduced legal costs for the chip maker and could lead to a similar agreement with China’s Huawei Technologies. Putting the legal battle behind it also allows Qualcomm to put additional focus on gearing up for rollout of high-speed 5g network. Qualcomm reports fiscal second-quarter earnings after the market close Wednesday. Analysts forecast earnings of $0.70 per share on revenue of $4.8 billion, versus earnings of $0.80 and sales of $5.23 billion during the same period last year. The street expects a positive earnings surprise with a whisper number of $0.76 and analysts have an average price target of $76.37 on the stock.
Credit card companies have been top performers in recent years. Mastercard (MA) has enjoyed steady gains since early 2016. A strong economy, high consumer confidence, and low unemployment has helped drive the sector which has also benefited from a societal shift to a more “cashless society”. Mastercard has enjoyed average annual earnings growth of 19% over the last five years and looking ahead analysts expect more of the same with forecast growth of 21% per annum over the next five years. The strong growth should continue to keep strength under the stock barring any future negative surprises. The company reports Q1 numbers before the market open Tuesday with a consensus of $1.67 per share. Mastercard has posted positive earnings surprises the last eight quarters and the street expects another earnings beat with a whisper number of $1.70 for the quarter. Analysts have an average price target of $249.30 on the stock.
Payment processor Square (SQ) will report its first-quarter numbers after the market close Wednesday. The consensus calls for earnings of $0.08 and revenue of $937.6 million. During the same period last year the company reported earnings of $0.06 and had revenue of $307 million. Square continues to grow nicely with earnings expected to rise 57% during the current year and by an average annual rate of 47% over the next five years. The stock has a very high valuation with a forward P/E of 65, which is acceptable given the strong growth estimates, but also means that shares are priced for perfection and could sell off sharply on any sign of weakness such as a negative earnings surprise. Last quarter the company reported earnings in-line with the consensus while revenues easily topped estimates. This quarter the street expects to see Square post a solid earnings beat with a whisper number of $0.10. The stock has traded sideways since the last earnings report and Wall Street will need a positive surprise this quarter for shares to break out of their sideways pattern and move higher. Analysts see a lot of upside in the stock regardless of its current valuation. SQ is trading at $73.12 with an average price target of $87.63.