The corporate earnings season ramps up this week, as investors look for more clarity on how companies are weathering persistent inflation and interest rates. More than 80 S & P 500 names are slated to report, including Tesla, Microsoft and Boeing. Roughly 55 companies have posted calendar fourth-quarter earnings thus far, with 69% of them beating expectations. This beat rate, however, lags historical trends, according to The Earnings Scout CEO Nick Raich. In a note Friday, he pointed out that the average beat rate for fourth-quarter earnings is 79%. “Less companies are beating estimates, and by a lesser amount,” Raich wrote, adding that “growth is slowing rapidly.” As things stand now, S & P 500 earnings are on track for a 4.6% year-over-year drop, according to FactSet. That would mark the worst earnings season since third-quarter 2020 profits declined by 5.7%. Check out some of the key companies slated to post results this week, and what investors can expect out of each report. Tuesday Johnson & Johnson is set to report earnings before the bell, followed by a conference call at 8:30 a.m. ET. Last quarter: JNJ posted quarterly earnings and revenue that beat analyst expectations, thanks in part to strong sales from its pharmaceutical division. This quarter: Analysts expect single-digit earnings growth for the pharma giant, according to Refinitiv. What CNBC is watching: J & J is broadly expected to meet expectations in its latest quarterly report, with several analysts noting that Covid-related headwinds and other macroeconomic factors are mostly baked into estimates. A potential wild card could come from the company’s full-year guidance. “Initial commentary on the 2023 outlook as provided during the company’s discussion of 3Q22 results included an expectation for some potential abatement of inflationary pressures during 2023, though management had also commented that higher costs associated with inventory manufactured during 2022, would be flowing through the P & L during 2023,” Goldman Sachs analyst Chris Shibutani said in his J & J earnings preview note. What history shows: Johnson & Johnson has beaten earnings expectations 95% of the time, according to Bespoke Investment Group. The stock also averages a gain of 0.27% on earnings days, but it fell after the last two reports were released. Microsoft is set to report earnings after the close. Management is set to hold a call with analysts at 5:30 p.m. ET. Last quarter: MSFT issued weak guidance on its earnings call , overshadowing better-than-expected quarterly results. This quarter: The tech giant is forecast to post a single-digit earnings decline, according to Refinitiv. What CNBC tech reporter Jordan Novet is watching: ” Microsoft has told investors to brace for gloomy fiscal second-quarter results. Its guidance from October called for just 2% revenue growth. Sales of Surface PCs and Windows licenses to device makers could be down considerably, with Gartner estimating the slowest growth in PC revenue since the company started keeping track of the market in the mid-1990s. Executive comments on clients’ efforts to optimize their spending on Microsoft’s Azure cloud-infrastructure services will be critical. More detail on a hardware cutback following a brief reference to that change in Microsoft’s Jan. 18 layoff announcement would also be welcome.” What history shows: Microsoft has a history of posting better-than-expected earnings, with the company’s bottom line topping estimates 80% of the time, according to Bespoke. The stock has averaged modest gains on earnings days, but it has seen swings of more than 6% after the last two reports. Wednesday Boeing is set to report earnings before the bell, followed by a call with analysts at 10:30 a.m. ET. Last quarter: BA reported a quarterly loss, citing problems in its Air Force One and tanker programs . This quarter: The airplane manufacturer’s top line is expected to grow by 37.1% on a year-over-year basis, Refinitiv data shows. What CNBC airline reporter Leslie Josephs is watching: “Orders for new jets really picked up steam in 2022. Can Boeing keep up? Supply chain and labor shortfalls are delaying deliveries of new jets, leaving carriers with fewer planes than they need — an issue affecting both Boeing and its archrival Airbus. Since the bulk of an airplane’s price is paid upon delivery, what do these issues mean for Boeing’s cash generation this year, and how long will it take the manufacturer to ramp up production? Investors will expect a robust update on how Boeing is addressing problems throughout its defense unit.” What history shows: FactSet data shows Boeing has posted a greater-than-expected loss in the last five quarters. However, the stock’s performance on earnings days has been mixed recently. Boeing shares fell more than 8% after the company posted its third-quarter results, but rose slightly on the back of its second quarter figures. Tesla is set to report earnings after the close, with management set to hold a call at 5:30 p.m. ET. Last quarter: TSLA reported an adjusted profit that beat analyst expectations. CEO Elon Musk also addressed his Twitter takeover and a possible recession during an earnings call . This quarter: The electric car maker’s top and bottom line are forecast to gain by more than 30% each, per Refinitiv. What CNBC is watching: A key metric to watch in Tesla’s fourth-quarter earnings could be the company’s margins, especially after the electric car maker implemented big price cuts. “For Tesla, we feel good about Q4 margins although there are some uncertainties around investor expectations for the quarter, given the one-time FSD rollout benefit. Management has historically not provided specific current year outlook, but could comment directionally on securing close to 40-50% volume growth this year, following deep price cuts,” Deutsche Bank analyst Emmanuel Rosner said in a note. What history shows: Tesla’s earnings have beaten expectations 65% of the time, and the stock has averaged a 1.3% gain on earnings days, according to Bespoke. IBM is set to report earnings after the close. Corporate leadership is then scheduled to hold an analyst call at 5 p.m. ET. Last quarter: IBM beat earnings and revenue expectations for the quarter. It also lifted its full-year guidance . This quarter: Refinitiv data shows IBM’s bottom line is expected to have expanded by about 7% from the year-earlier period. What CNBC tech reporter Jordan Novet is watching: “IBM is coming off an impressive 2022, outperforming most technology stocks . It appears that 2023 will be harder, because it will be compared against its performance from last year, during which it released a mainframe computer and saw growth in consulting deals for cloud-computing implementation projects. Wall Street thinks IBM’s revenue declines are coming back for the first time in two years, even though the U.S. dollar has weakened. Investors will be listening for any indications that IBM might not be able to deliver $35 billion in free cash flow between 2022 and 2024, a goal it announced in 2021.” What history shows: Bespoke data shows IBM has topped analyst earnings expectations 84% of the time, but the stock averages a 0.6% decline after the legacy tech giant posts results. To be sure, IBM popped more than 4% on the back of its Oct. 19 quarterly report. Thursday American Airlines is set to report earnings in the premarket, followed by a call at 8:30 a.m. ET. Last quarter: AAL posted earnings and revenue that beat analyst forecasts, adding it sees a fourth-quarter profit thanks to strong travel demand . This quarter: The airline is forecast to report a year-over-year revenue jump of nearly 40%, Refinitiv data shows. What CNBC airline reporter Leslie Josephs is watching: “American Airlines already pleased investors with its big profit and revenue forecast boost earlier this month, but it’s the outlook that’s key. Investors will focus in on how American is getting a handle on costs and an update on how business travel demand is improving. Executives will also face questions about the state of labor negotiations at the carrier and how the airline is grappling with supply-chain shortages.” What history shows: American Airlines’ bottom line has beaten expectations eight of the last 10 quarters, FactSet data shows. The stock, however, has fallen in the last two earnings days. Southwest Airlines is set to report earnings in the premarket, followed by a call at 12:30 p.m. ET. Last quarter: LUV said travel demand was strong but warned that Boeing delays could continue into 2024 . This quarter: Analysts polled by Refinitiv see the airline posting a loss for the fourth quarter. What CNBC airline reporter Leslie Josephs is watching: “Southwest’s spectacular holiday meltdown has drawn the ire of consumers, employees and politicians alike. Investors, not so much as the carrier stabilizes from the incident, which could have cost it around $800 million. Executives will face questions about how it’s bolstering its internal technology to avoid a repeat event. Investors will expect an update on labor negotiations, which were already strained before the mess started.” What history shows: Bespoke data shows Southwest earnings beat expectations 65% of the time. More recently, the airline’s results have topped estimates in nine of the last 12 quarters. Intel is set to report earnings after the bell, followed by a conference call between analysts and corporate leadership at 5 p.m. ET. Last quarter: INTC announced cost reductions through 2025 that could reach $10 billion . This quarter: Analysts expect a downbeat quarter from the chipmaker, with Intel’s earnings per share forecast to have fallen more than 80%, per Refinitiv. What CNBC tech reporter Jordan Novet is watching: “The PC market shrank more than any quarter since technology industry researcher Gartner started following it in the 1990s. That’s rough news for Intel, which still generates most of its revenue from the Client Computing Group that focuses on PC chips. It doesn’t help that Intel is ceding share in the server market to AMD. Earlier this month Intel launched its fourth-generation Xeon Scalable processors formerly known by the code name Sapphire Rapids, but analysts at Bernstein said for similar price, customers can buy an AMD chip containing more cores. Intel has called for a fourth consecutive quarter of year-over-year revenue declines.” What history shows: Intel’s earnings per share have eaten expectations 78% of the time, but the chipmaker’s stock struggles on earnings days, averaging a decline of 1.07%, according to Bespoke. To be sure, Intel shares rallied more than 10% after the company’s most-recent report.
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