Five Stocks to Watch as They Report Earnings

Tuesday, November 10, 2020 2:15 PM | Neal Farmer

As earnings season comes to a close we are left with a few big names and some trendy stocks that have caught investors' eyes recently. Almost all of the biggest names have already reported  and the few left are not easily sorted into any particular group. Still, investors should keep an eye out for these companies’ performance as it will shed light on how these firms are doing in response to COVID as cases continue to rise again.

With that being said, here are five stocks to keep an eye out for this week:

Disney (DIS)

Disney is probably the most recognizable name reporting this week and is one of the most actively traded stocks on the market. While its share price had been consistently rising in recent years, coronavirus sent it tumbling more than 40%. Disney stock has recovered since that low in March but still remains below its price from the beginning of the year. While much of Disney’s profits come from movies, television networks and streaming services, a significant portion of the business remains in amusement parks that are hurting from efforts to contain the coronavirus. In its second quarter of 2019, Disney’s Parks Experiences and Consumer Products segment accounted for 41.3% of Disney’s total revenue. Predictably as a result of park closures and other efforts to limit the spread of coronavirus, Disney’s EPS fell all the way to $0.08 last quarter from $1.61 in the same quarter of 2019.

Analysts expect Disney to report an EPS of -$0.62 this quarter. Disney has consistently outperformed estimates, beating out expectations last quarter of a -$0.43 EPS with that $0.08 result. However, it did miss estimates in the first quarter this year and the third quarter does usually underperform compared to second quarter results.

Disney’s transition from being over reliant on parks does bodes well. Not many companies can claim the number of revenue sources that Disney has. Additionally, analysts expect the company to deliver higher EPS each quarter over the next year as Disney will almost assuredly recover from the pandemic.

Cisco Systems (CSCO)

Cisco is the second-biggest name on this list. The most interesting about Cisco's earnings is that they are very boring. Cisco has reported an EPS between 0.71 and 0.77 every quarter over the past year and it looks like that trend won't change this quarter. Analysts are expecting EPS of $0.63 but Cisco has beaten estimates every quarter in the past year by an average of about $0.05. The most-shocking thing that could possibly happen would be EPS below $0.70 or if the company reports a gross profit that doesn't match the $7.7 million they’ve reported the past three quarters.

While the results are boring, they demonstrate a very commendable stability, especially during this ridiculous year. Cisco’s share price has experienced more volatility than its earnings reports but still fell far less than most stocks and almost reached a new high back in August. Since then though, the stock had been on an consistent decline, except for the past two weeks. Markets seem to be trending upwards once again after the election and vaccine news. Another stable earnings report from Cisco might get the stock back on track.

DraftKings (DKNG)

Now for a more trendy stock that's has been popular on r/wallstreetbets. DraftKings stock has soar while no sports were going on and then fell once they returned to action. The company’s stock did hit new highs back in early October when the NBA Finals were played, and the NFL and college football returned, MLB playoffs were active, and the Stanley Cup was coming to an end. Since that high though, DKNG has fallen more than 33% and only only football is currently playing games. The NBA has announced its new season is planned to start in late December and the NHL plans to start at the New Year after originally planning for the beginning of December.

The recent news of many sports returning has led to some upward price movement for DKNG but not much. There is not much earnings history to analyze either for DraftKings as the company is only making its third ever report this quarter. It is certainly not looking good though as EPS estimates are -$0.64 after the company lost $0.55 per share last quarter. A new. growing company is expected to report negative EPS for some time and analysts are expecting the company to report EPS -$0.26 a full year from now. Even still, the return of sports in the next month or two while football gets ready for playoff time will likely result in another little price surge for DKNG.

Brookfield Asset Management (BAM)

As you might expect with a financial services company heavily focused on real estate, Brookfield stock has yet to recover from the effects of COVID-19 with its share price still below where it started the year. What you might be shocked to hear is that Brookfield has been absolutely crushing earnings estimates recently. The company reported EPS of $0.55 and $0.73 over the last two quarters while estimates were for $0.48 and $0.43 respectively. Average estimates for Brookfield are around $0.45 this quarter compared to the $0.53 it reported in the year-ago quarter.

Financial institutions remain in a very uncertain position with millions still unemployed and new coronavirus cases rising past 100,000 a day. Brookfield has remained strong so far, but it is unclear how long that can continue. Hopefully the company has prepared for the long term effects of COVID but given that no one knows exactly what that looks like, Brookfield remains a riskier investment. Long term investments may pay off strong given the share price remains below where it was to start the year. (WIX)

Time to end the list with a stock that actually received a boost from the coronavirus. Wix's share price did dip back in February it has since tripled from its low. Wix set a new high in early July but has traded flat since then and has more recently fallen, although only slightly. While investors seem to be optimistic about the company’s future along with similar firms such as Shopify, the earnings tell a much different story.

Wix is still a pretty young company but negative EPS is getting a little old. The company most-recently reported EPS of -$0.9 last quarter. Wix had been outperforming expectations consistently until that quarter as analysts expected  -$0.42. As a result, estimates are hovering around -$0.9 for the third quarter after -$0.15 in the year-ago quarter. Hopefully Wix can surpass those minimum expectations. The share prices fell more than 15% after its last report.

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