As we move deeper into the current earnings season there are plenty of big-name stocks to watch as quarterly numbers come in. This week features a diversified group of sector leaders that will set the tone for the overall market.
So far it has been a fairly strong earnings season, and investor confidence remains high as we advance into the second half of the year.
The trade war and interest rates will remain the main talking points on Wall Street for the remainder of the year, but earnings will also be a primary focus as traders try to determine the impact the trade war is having on corporate earnings growth.
Technology, consumer goods, automotive and telecom leaders are among the companies set to report their quarterly numbers this week, and each report could ripple across the market, so they are all important to watch.
Let's take a closer look at each.
Tech leader Apple (AAPL) will be the closest watched report this week. The iPhone maker has long been a driver of the tech sector but concerns over China and slowing iPhone sales are weighing on the stock ahead of this week's report. The company reports after the market close Tuesday, with the consensus calling for earnings of $2.10 per share, down from $2.34 during the same period last year. Last quarter Apple impressed the market with strong growth in its services segment, and Wall Street will want more of the same this time around. With iPhone sales slowing, and no other real innovative product on the horizon, Wall Street believes services is going to the primary growth driver moving forward. Apple has traded higher over the last six weeks as strength returned to the overall market, and a positive earnings surprise could easily drive the stock back to its record high and push its market cap back above the $1 trillion mark. AAPL is trading at $210.09 with an average price target of $213.34.
Kellogg (K) will report its second-quarter numbers before the market open Thursday. Analysts expect the company to earn $0.91 per share on revenue of $3.43 billion, versus $1.14 on $3.36 billion during the same period last year. K has been stuck in a sideways patter in the lower end of its 52-week range since the start of 2019, and Wall Street needs to see some big numbers for investor confidence to return to the stock. Over the last five years the company has managed to grow earnings at a modest 2.8% per annum, and Wall Street is not very optimistic with the company's ability to grow profits moving forward with forecast average annual growth of just 0.8% over the next five years. The street does expect a small earnings surprise with a whisper number of $0.93 for the quarter, which would help the stock break out of its sideways pattern, but Wall Street needs to see a bigger beat and consistent positive earnings surprise for K to start to show consistent trading strength. K is trading at $58.34 with an average price target of $62.45.
General Motors (GM)
Detroit automaker General Motors (GM) reports second-quarter results before the market open on Thursday. The consensus calls for earnings of $1.43 per share and sales of $35.71 billion. During the same period last year General Motors earned $1.81 and had sales of $35.6 billion. The auto market has cooled off, with analysts expecting annual sales of around 16.9 million vehicles, down from 17.3 million in 2018. It is not a huge drop, and 16.9 million is still a very strong number as long as automakers are able to hit estimates. GM stock is currently trading at its 52-week high, but with a forward P/E of just 6.5 so there is still value in the stock at the current level. Profits are expected to be down big from last year, but the market will overlook the year over year decline as long as GM is able to hit its estimate. Last quarter earnings were better than expected, and the street expects another positive earnings surprise with a whisper number of $1.49. China is a huge market for GM, so look for any updates on what is taking place in China during the conference call as an indicator as to whether or not the ongoing trade war will cause greater than expected problems for the company in the nation. Analysts see a lot of additional upside in GM, which trades at $40.82 with an average price target of $46.75.
Telecom giant Verizon (VZ) is expected to report its second-quarter numbers before the market open Thursday with analysts forecasting earnings of $1.20 per share on revenue of $32.4 billion, in-line with the same period last year when Verizon earned $1.20 with sales of $32.2 billion. VZ stock has been stuck in a sideways trend for the first half of the year, and Wall Street needs to see a strong set of quarterly numbers for the stock to break out to the upside. Verizon is in a very competitive market, and earnings growth has been modest for the entire sectors. Over the last five years Verizon has grown earnings at an annual rate of 5.5% and looking ahead analysts forecast profits to rise at 2.8% per annum over the next five years. The street is looking for a positive earnings surprise for the quarter with a whisper number of $1.23. VZ is trading at $57.06 with an average price target of $59.74.