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Earnings season begins in earnest this week. As always, earnings results and guidance will be critical in determining the state of the broader economy, and how investors decide to position their portfolios.
These stocks cover three different, but important sectors of the economy. Together their earnings results should provide some very valuable insights into consumers, and economy.
Tesla
Tesla (TSLA - Free Report) had a very strong start to the year, up nearly 50% YTD. However, the stock price made all those gains in the first six weeks of 2023. TSLA has since traded sideways and has now built out a significant consolidation.
It isn’t abundantly clear from this chart whether TSLA stock will break higher or lower, but the direction it does break will be very significant. As a leading stock in the market, it may signal the next direction of the broader indexes.
Breakout, and the bull market is back on. Breakdown, and there may be more pain ahead for the market. It seems very possible that TSLA breaks out of this range after its earnings report. Tesla reports Wednesday, April 19 after the market closes.
Image Source: TradingView
Tesla currently has a Zacks Rank #3 (Hold), indicating mixed earnings revisions. Sales growth for the current quarter is expected to be strong. Estimates are projecting 26% YoY growth to $24 billion. But earnings are projected to compress -21% YoY to $0.85 per share.
Analysts have lowered earnings expectations for the current quarter and current year but raised estimates for the next quarter and FY24. That strong sales growth is hard to ignore, and the increasing popularity of electric vehicles should be a tailwind for TSLA for a long time.
Image Source: Zacks Investment Research
After TSLA stock corrected -75% over the last year, its valuation has become far more reasonable. Tesla is currently trading at a one-year forward earnings multiple of 54x, which is above the industry average of 32x, and well below its two-year median of 109x. TSLA was trading as high as 300x earnings over the last two years.
Image Source: Zacks Investment Research
Taiwan Semiconductor
Taiwan Semiconductor (TSM - Free Report) , one of the world's largest producers of semiconductors, reports earnings Thursday, April 20, before the market opens.
Taiwan Semiconductor is like Tesla in that it started the year off very strong, up 18% YTD but has traded sideways over the last couple of months. TSM’s chart looks a bit more ominous than TSLA, hovering just above the bottom of the range. TSM looks close to breaking down below the $85 level. It seems the market is waiting for both stocks to report before making the next big move.
Image Source: TradingView
TSM is a Zacks Rank #3 (Hold) stock, indicating mixed earnings revisions. Sales and earnings estimates are definitely a mixed bag going forward. Current quarter sales are expected to be nearly flat YoY, while earnings are projected to drop -14% to $1.21 per share.
Analysts are expecting some trouble in the semiconductor industry in the current year, but expectations resume the uptrend for FY24. Sales are expected to climb 14% to $90 billion, and earnings are expected to grow 17% to $6.54 per share in 2024.
Image Source: Zacks Investment Research
TSM is currently trading at a one-year forward earnings multiple of 16x, which is below the market average of 19x, and below its five-year median of 20x. After a challenging couple of years, TSM has come way off its high valuation and currently looks very appealing. TSM also offers a 1.65% dividend yield.
Image Source: Zacks Investment Research
Semiconductor sales are an important bellwether for the broader economy. While at the beginning of the year, it was a consensus that the world economy would experience a considerable slowdown, that prediction has yet to come to fruition. The economy continues to remain robust, so maybe the recent weakness in the TSM chart is just a fake out before the next leg higher.
Procter and Gamble
Procter and Gamble (PG - Free Report) , the consumer staples giant is another great American company, whose earnings results provide insight into the general economy. Consumer staples should see consistent sales during good and bad times, as they are necessities for many consumers. Misses in sales could mean that consumers are really hurting.
Procter and Gamble currently has a Zacks Rank #3 (Hold), indicating mixed earnings expectations. Current quarter sales and earnings growth are expected to be nearly flat YoY, but current quarter earnings have been revised lower over the last three months. The next few reporting periods expect a rebound in growth though.
Image Source: Zacks Investment Research
PG is trading at a one-year forward earnings multiple of 26x, which is above the market average of 19x and its five-year median of 24x. Procter and Gamble has been a safe haven over the last two years and has outperformed the market. Further encouraging investors to buy PG is its dividend yield of 2.5%, which it has increased 7% annually over the last three years.
Image Source: Zacks Investment Research
As the economy has remained strong so too has PG, but there are risks to PG’s bottom line other than growth. Inflation remains the primary risk for PG as higher commodity costs, and labor costs shrink profits.
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3 Critical Earnings Reports to Watch This Week
Earnings season begins in earnest this week. As always, earnings results and guidance will be critical in determining the state of the broader economy, and how investors decide to position their portfolios.
These stocks cover three different, but important sectors of the economy. Together their earnings results should provide some very valuable insights into consumers, and economy.
Tesla
Tesla (TSLA - Free Report) had a very strong start to the year, up nearly 50% YTD. However, the stock price made all those gains in the first six weeks of 2023. TSLA has since traded sideways and has now built out a significant consolidation.
It isn’t abundantly clear from this chart whether TSLA stock will break higher or lower, but the direction it does break will be very significant. As a leading stock in the market, it may signal the next direction of the broader indexes.
Breakout, and the bull market is back on. Breakdown, and there may be more pain ahead for the market. It seems very possible that TSLA breaks out of this range after its earnings report. Tesla reports Wednesday, April 19 after the market closes.
Image Source: TradingView
Tesla currently has a Zacks Rank #3 (Hold), indicating mixed earnings revisions. Sales growth for the current quarter is expected to be strong. Estimates are projecting 26% YoY growth to $24 billion. But earnings are projected to compress -21% YoY to $0.85 per share.
Analysts have lowered earnings expectations for the current quarter and current year but raised estimates for the next quarter and FY24. That strong sales growth is hard to ignore, and the increasing popularity of electric vehicles should be a tailwind for TSLA for a long time.
Image Source: Zacks Investment Research
After TSLA stock corrected -75% over the last year, its valuation has become far more reasonable. Tesla is currently trading at a one-year forward earnings multiple of 54x, which is above the industry average of 32x, and well below its two-year median of 109x. TSLA was trading as high as 300x earnings over the last two years.
Image Source: Zacks Investment Research
Taiwan Semiconductor
Taiwan Semiconductor (TSM - Free Report) , one of the world's largest producers of semiconductors, reports earnings Thursday, April 20, before the market opens.
Taiwan Semiconductor is like Tesla in that it started the year off very strong, up 18% YTD but has traded sideways over the last couple of months. TSM’s chart looks a bit more ominous than TSLA, hovering just above the bottom of the range. TSM looks close to breaking down below the $85 level. It seems the market is waiting for both stocks to report before making the next big move.
Image Source: TradingView
TSM is a Zacks Rank #3 (Hold) stock, indicating mixed earnings revisions. Sales and earnings estimates are definitely a mixed bag going forward. Current quarter sales are expected to be nearly flat YoY, while earnings are projected to drop -14% to $1.21 per share.
Analysts are expecting some trouble in the semiconductor industry in the current year, but expectations resume the uptrend for FY24. Sales are expected to climb 14% to $90 billion, and earnings are expected to grow 17% to $6.54 per share in 2024.
Image Source: Zacks Investment Research
TSM is currently trading at a one-year forward earnings multiple of 16x, which is below the market average of 19x, and below its five-year median of 20x. After a challenging couple of years, TSM has come way off its high valuation and currently looks very appealing. TSM also offers a 1.65% dividend yield.
Image Source: Zacks Investment Research
Semiconductor sales are an important bellwether for the broader economy. While at the beginning of the year, it was a consensus that the world economy would experience a considerable slowdown, that prediction has yet to come to fruition. The economy continues to remain robust, so maybe the recent weakness in the TSM chart is just a fake out before the next leg higher.
Procter and Gamble
Procter and Gamble (PG - Free Report) , the consumer staples giant is another great American company, whose earnings results provide insight into the general economy. Consumer staples should see consistent sales during good and bad times, as they are necessities for many consumers. Misses in sales could mean that consumers are really hurting.
Procter and Gamble currently has a Zacks Rank #3 (Hold), indicating mixed earnings expectations. Current quarter sales and earnings growth are expected to be nearly flat YoY, but current quarter earnings have been revised lower over the last three months. The next few reporting periods expect a rebound in growth though.
Image Source: Zacks Investment Research
PG is trading at a one-year forward earnings multiple of 26x, which is above the market average of 19x and its five-year median of 24x. Procter and Gamble has been a safe haven over the last two years and has outperformed the market. Further encouraging investors to buy PG is its dividend yield of 2.5%, which it has increased 7% annually over the last three years.
Image Source: Zacks Investment Research
As the economy has remained strong so too has PG, but there are risks to PG’s bottom line other than growth. Inflation remains the primary risk for PG as higher commodity costs, and labor costs shrink profits.