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Top Earnings Reports for the Week of January 16: What Are They Telling Us?
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Earnings season is upon us again. After a big release of data last week including inflation, jobless claims, and consumer sentiment the market can now look forward to earnings. With many strong opinions on Wall Street about future economic growth, these reports can bring some much-needed insight on what to expect for this year.
Goldman Sachs and Morgan Stanley
First out of the gate Tuesday morning were the big investment banks. Goldman Sachs (GS - Free Report) missed, reporting quarterly earnings of $3.32 per share, when Zacks Consensus Estimate was $5.25 per share. Goldman said its Q4 profits dropped to $1.19 billion, from $3.81 billion in Q4 2021. Revenue for Q4 dropped to $10.59 billion from $12.64 billion in the year earlier quarter. Expectation for revenue was $10.8 billion. EPS missed by -42% and revenue missed by -2.8%.
This was a very disappointing earnings report for the bank and demonstrates a clear slowdown in business. It should be noted that Zacks research could have helped avoid GS stock. Goldman Sachs currently holds a Zacks Rank #3 (Hold), indicating a lack of earnings growth momentum. Zacks had also been consistently revising estimates lower for GS over the last 90 days. Additionally, using Zacks Style Scores, GS holds an F in Value, Growth, and Momentum.
Goldman Sachs laid off 3,200 people over the last few weeks, likely to address these painful financial results. GS shares are down 2.5% in premarket trading.
Image Source: Zacks Investment Research
Morgan Stanley (MS - Free Report) fared better than Goldman. Earnings of $1.31 per share or $2.1 billion, beating the Zacks estimate of $1.25 per share. This was a worse result than Q4 2021 though, which showed earnings of $3.6 billion or $2.01 per share. Q4 Revenue came in at $12.8 billion, narrowly beating the estimate of $12.6 billion.
Interactive Brokers and Charles Schwab
Large retail brokerage houses also report this week too. Interactive Brokers was one of few stocks that performed well in 2022, finishing the year unchanged. (IBKR - Free Report) is currently a Zacks Rank #1 (Strong Buy) stock with very strong earnings and sales growth estimates.
Q4 Zacks Consensus Sales estimates call for 53% YoY growth to $926 million, and FY 2022 sales are estimated to climb 22% to $3.2 billion. Q4 earnings estimates are $1.16 per share, growing 40% YoY, and FY 2022 earnings are projected to be up 16.4% at $3.93 per share. IBKR reports earnings on Tuesday after the close.
Charles Schwab (SCHW - Free Report) , another broker and financial services business, will be reporting earnings Wednesday, January 18 before the market opens. Like IBRK, SCHW outperformed the market in 2022 as the stock was down only marginally.
The Zacks Rank doesn’t consider SCHW as favorably as IBKR and currently scores it a #3 (Hold) indicating slow to no upward earnings growth trend. Q4 sales are expected to grow 18% to $5.5 billion, while FY2022 sales are expected to climb 12.5% to $21billion. Q4 earnings are projected to increase by 28% to $1.10 per share and FY 2022 earnings expected to increase by 21% to $3.93 per share.
Considering the slowing of speculative action, and the generally painful environment of the stock market in 2022 it will be very informative to see how the brokers’ earnings fared. Although there was far less hype in the market, I wouldn’t be surprised if retail investors are more active in down years to try and stem losses.
Big Earnings Calls
Thursday will bring a couple big reports as well, including Procter and Gamble (PG - Free Report) , and Netflix (NFLX - Free Report) .
Netflix, which had a stunning rally off its lows in the second half of 2022 has a highly anticipated report coming out. After reporting the first subscriber decline in a decade during their Q2 earnings, it appears that growth is back on track. NFLX is projecting an extremely high growth quarter expecting 4.5 million new paid subscribers.
NFLX has a Zacks Rank #3 (Hold), given its lack of positive earnings revisions trend. Q4 sales growth is projected at 1.67% or $7.8 billion, and FY sales are expected to grow 6.4% to $31.6 billion. Earnings expectations for Q4 are expected to shrink -66% to $0.45 per share, and -8.3% to $10.31 per share for FY 2022.
Below you can also see that Q4 estimates have halved over the last 90 days, demonstrating lowered expectations for the company.
Image Source: Zacks Investment Research
Another important earnings report will be coming from Procter and Gamble on Thursday before the market opens. PG currently sports a Zacks Rank #2 (Buy), and its Zacks Sector Rank is in the top 25%.
Q4 estimates for PG have sales marginally lower -1.7% to $20.6 billion, with earnings expected to shrink as well by 4.8% to $1.58 per share. Procter and Gamble report annual numbers during the Q2 reporting period.
While PG has tremendous leeway in pricing its products considering its standing as a consumer staples power, it will be interesting to see how commodity inflation, and freight cost may have affected the bottom line. Considering projections, it appears they are not expecting a great year looking forward in those regards.
Getting Started
This earnings season is just getting started and the next few weeks will provide a lot of valuable information on how the economy performed in the last quarter of 2022. The broad market and economy are at something of a precipice, as investors are now expecting a ‘soft landing’. Whether or not that will be the case, only time will tell, but getting into the minutiae of these reports will help inform investors about how close a recession may be, or where we can expect prices to go.
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Top Earnings Reports for the Week of January 16: What Are They Telling Us?
Earnings season is upon us again. After a big release of data last week including inflation, jobless claims, and consumer sentiment the market can now look forward to earnings. With many strong opinions on Wall Street about future economic growth, these reports can bring some much-needed insight on what to expect for this year.
Goldman Sachs and Morgan Stanley
First out of the gate Tuesday morning were the big investment banks. Goldman Sachs (GS - Free Report) missed, reporting quarterly earnings of $3.32 per share, when Zacks Consensus Estimate was $5.25 per share. Goldman said its Q4 profits dropped to $1.19 billion, from $3.81 billion in Q4 2021. Revenue for Q4 dropped to $10.59 billion from $12.64 billion in the year earlier quarter. Expectation for revenue was $10.8 billion. EPS missed by -42% and revenue missed by -2.8%.
This was a very disappointing earnings report for the bank and demonstrates a clear slowdown in business. It should be noted that Zacks research could have helped avoid GS stock. Goldman Sachs currently holds a Zacks Rank #3 (Hold), indicating a lack of earnings growth momentum. Zacks had also been consistently revising estimates lower for GS over the last 90 days. Additionally, using Zacks Style Scores, GS holds an F in Value, Growth, and Momentum.
Goldman Sachs laid off 3,200 people over the last few weeks, likely to address these painful financial results. GS shares are down 2.5% in premarket trading.
Image Source: Zacks Investment Research
Morgan Stanley (MS - Free Report) fared better than Goldman. Earnings of $1.31 per share or $2.1 billion, beating the Zacks estimate of $1.25 per share. This was a worse result than Q4 2021 though, which showed earnings of $3.6 billion or $2.01 per share. Q4 Revenue came in at $12.8 billion, narrowly beating the estimate of $12.6 billion.
Interactive Brokers and Charles Schwab
Large retail brokerage houses also report this week too. Interactive Brokers was one of few stocks that performed well in 2022, finishing the year unchanged. (IBKR - Free Report) is currently a Zacks Rank #1 (Strong Buy) stock with very strong earnings and sales growth estimates.
Q4 Zacks Consensus Sales estimates call for 53% YoY growth to $926 million, and FY 2022 sales are estimated to climb 22% to $3.2 billion. Q4 earnings estimates are $1.16 per share, growing 40% YoY, and FY 2022 earnings are projected to be up 16.4% at $3.93 per share. IBKR reports earnings on Tuesday after the close.
Charles Schwab (SCHW - Free Report) , another broker and financial services business, will be reporting earnings Wednesday, January 18 before the market opens. Like IBRK, SCHW outperformed the market in 2022 as the stock was down only marginally.
The Zacks Rank doesn’t consider SCHW as favorably as IBKR and currently scores it a #3 (Hold) indicating slow to no upward earnings growth trend. Q4 sales are expected to grow 18% to $5.5 billion, while FY2022 sales are expected to climb 12.5% to $21billion. Q4 earnings are projected to increase by 28% to $1.10 per share and FY 2022 earnings expected to increase by 21% to $3.93 per share.
Considering the slowing of speculative action, and the generally painful environment of the stock market in 2022 it will be very informative to see how the brokers’ earnings fared. Although there was far less hype in the market, I wouldn’t be surprised if retail investors are more active in down years to try and stem losses.
Big Earnings Calls
Thursday will bring a couple big reports as well, including Procter and Gamble (PG - Free Report) , and Netflix (NFLX - Free Report) .
Netflix, which had a stunning rally off its lows in the second half of 2022 has a highly anticipated report coming out. After reporting the first subscriber decline in a decade during their Q2 earnings, it appears that growth is back on track. NFLX is projecting an extremely high growth quarter expecting 4.5 million new paid subscribers.
NFLX has a Zacks Rank #3 (Hold), given its lack of positive earnings revisions trend. Q4 sales growth is projected at 1.67% or $7.8 billion, and FY sales are expected to grow 6.4% to $31.6 billion. Earnings expectations for Q4 are expected to shrink -66% to $0.45 per share, and -8.3% to $10.31 per share for FY 2022.
Below you can also see that Q4 estimates have halved over the last 90 days, demonstrating lowered expectations for the company.
Image Source: Zacks Investment Research
Another important earnings report will be coming from Procter and Gamble on Thursday before the market opens. PG currently sports a Zacks Rank #2 (Buy), and its Zacks Sector Rank is in the top 25%.
Q4 estimates for PG have sales marginally lower -1.7% to $20.6 billion, with earnings expected to shrink as well by 4.8% to $1.58 per share. Procter and Gamble report annual numbers during the Q2 reporting period.
While PG has tremendous leeway in pricing its products considering its standing as a consumer staples power, it will be interesting to see how commodity inflation, and freight cost may have affected the bottom line. Considering projections, it appears they are not expecting a great year looking forward in those regards.
Getting Started
This earnings season is just getting started and the next few weeks will provide a lot of valuable information on how the economy performed in the last quarter of 2022. The broad market and economy are at something of a precipice, as investors are now expecting a ‘soft landing’. Whether or not that will be the case, only time will tell, but getting into the minutiae of these reports will help inform investors about how close a recession may be, or where we can expect prices to go.