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The earnings season hits full swing next week with 150 S&P companies due to report. The list of heavy hitters due up at the earnings plate includes Microsoft (MSFT) (preview), Meta Platforms (META) (preview), Boeing (BA) (analysis), and Coca-Cola (KO) (analysis). Outside of the earnings arena, the negotiations between United Parcel Service (UPS) and the International Brotherhood of Teamsters on a new labor contract that covers about 340,000 workers will be closely watched ahead of the expiration date of July 31. The strike potential has broad economic implications, with UPS handling roughly 28% of the 75 million packages delivered in the U.S. on a typical day, roughly split equally between businesses and homes. UPS and the Teamsters Union are scheduled to resume talks on July 25.
The calendar also includes a couple of major central bank meetings. The U.S. Federal Reserve is expected to boost interest rates a quarter point after being on hold at the June FOMC meeting. While inflation and the economy are both cooling, the statement from the Fed is anticipated to keep the existing policy rate guidance in place and reiterate that it will remain data dependent. Meanwhile, across the pond, the European Central Bank is forecast to raise its benchmark rate by 25 basis points and not rule out another rate hike in September.
Earnings spotlight: Monday, July 24 – Domino’s Pizza (DPZ), Whirlpool (WHR), and NXP Semiconductors (NXPI).
Earnings spotlight: Tuesday, July 25 – Kimberly-Clark (KMB), Microsoft (MSFT), Visa (V), Texas Instruments (TXN), Verizon (VZ), General Electric (GE), Alphabet (GOOG), and General Motors (GM).
Earnings spotlight: Wednesday, July 26 – Meta Platforms (META), Coca-Cola (KO), Union Pacific (UNP), Boeing (BA), AT&T (T), Chipotle (CMG), and Thermo Fisher Scientific (TMO).
Earnings spotlight: Thursday, July 27 – Mastercard (MA), AbbVie (ABBV), McDonald’s (MCD), Comcast (CMCSA), Ford Motor (F), Intel (INTC), TotalEnergies SE (TTE), and Bristol Myers-Squibb (BMY).
Earnings spotlight: Friday, July 28 – Exxon Mobil (XOM), Procter & Gamble (NYSE:PG), Chevron (CVX), and Centene (CNC).
Volatility watch: Short interest on both Coinbase Global (COIN) and Arhaus (ARHS) is at more than 20% of total float. Options trading volume is elevated on Nikola (NKLA) and FingerMotion (FNGR) once again. The judge in the settlement hearing over AMC Entertainment’s (AMC) plan to convert preferred equity units (APE) could issue a ruling during the week.
IPO and spinoff watch: No new IPOs are expected to start trading next week. However, the quiet period expires on a number of IPOs from June. Analysts will be free to post ratings on Savers Value Village (NYSE:SVV), Kodiak Gas Services (NYSE:KGS), Fidelis Insurance (NYSE:FIHL), Gen Restaurant Group (NASDAQ:GENK), Vesta (VTMX), Intensity Therapeutics (INTS), and Alliance Entertainment Holding (AENT). The lockup period also expires on blocks of shares of TXO Partners (TXO) and Genelux (GNLX).
Dividend watch: Companies projected to boost their quarterly dividend payouts include Voya Financial (VOYA) to $0.37 from $0.20, Wells Fargo (WFC) to $0.35 from $0.30, Cintas (CTAS) to $1.23 from $1.15, McKesson (MCK) to $0.58 from $0.54, and Landstar System (LSTR) to $0.23 from $0.30. See Seeking Alpha’s list of Quick Dividend Stock Picks.
Microsoft earnings preview: Microsoft (MSFT) will report earnings on July 25. Analysts expect the Redmond tech giant to churn up revenue of $55.5B during the quarter and EPS of $2.55. Expectations are high heading into the report, with the stock up more than 30% since the Q1 earnings report dropped and 23 of the last 26 EPS revisions from analysts being to the upward side. Options trading implies a 6.0% move up or down for shares the day after the report. Microsoft jumped more than 7% after the Q1 earnings report. On Wall Street, Morgan Stanley thinks MSFT is continuing to build momentum behind Generative AI solutions, easing optimization pressures, and a more benign FX environment. The Q2 report is seen being a likely catalyst for positive revisions to consensus across revenue, EBIT, and EPS. In terms of valuation, the firm maintained that Microsoft continues to trade at a discount to large-cap software peers ~31X average, and underprices the return to a durable high-teens total return profile. Meanwhile, Seeking Alpha analyst Tradevestor previewed MSFT earnings day by noting that it is too early to expect ChatGPT to have the kind of impact it is predicted to have on Microsoft’s revenue and EPS. The tech company’s tone on its AI initiatives is said to be likely to set the tone about how investors digest the result and guidance.
Meta Platforms earnings preview: This would be Meta’s strongest quarterly revenue growth in over a year, which is surprising for a company that was consistently growing its revenue by double-digit percentages, but sadly that’s been the story for Meta recently. Whilst a return to stronger growth is obviously a positive for investors, it is driven more by Meta’s poor performance back in 2022 than it is driven by strong business performance right now. The improving bottom line shouldn’t be a surprise, as Meta has shifted its focus away from the loss-making Reality Labs (aka Metaverse) segment and instead focused on making 2023 the Year of Efficiency – words that were guaranteed to excite Wall Street Analysts. A beat on the top and bottom line in Q1’23 signalled the start of a turnaround in Meta’s fortunes, and we can see this improvement in the underlying business as well. Options trading on Meta current implies an 8.5% move up or down the day after the earnings report. Meta soared more than 13% after the release of its Q1 earnings report.
Procter & Gamble earnings preview: Procter & Gamble (PG) will report earnings on July 28. The household products giant is expected to disclose FQ4 revenue of $20.02B, EPS of $1.32, and EBITDA of $4.93B. Organic sales are seen rising 5.92% during the quarter, led by strong marks in the beauty and grooming segments. Prices are expected to be up 5.65% from a year ago during the quarter, and organic volume is forecast to be down 0.96%. The key part of P&G earnings day is expected to be the full-year guidance update, “While elasticities appear to be holding in better and GM recovery is likely on the horizon, management has been quite vocal around the need to reinvest back into the business to drive balanced top line growth, which may limit the flowthrough looking out to FY24, “warned UBS. Procter & Gamble (PG) has topped revenue estimates in 14 of the last 16 quarters and beat EPS estimates in 15 of the last 16 quarters. Analysts have the Procter & Gamble (PG) earnings call circled as a potential share price mover for the broad consumer products sector. Stocks with a high trading correlation with P&G include Colgate-Palmolive (CL), Unilever (UL), and Kimberly-Clark (KMB).
Corporate events: Pacific Gas and Electric Company (NYSE:PCG) will hold an Innovation Summit on July 25. The summit will bring together entrepreneurs, start-ups, thought leaders, utility peers, private industry, national research labs, agency leaders, and policymakers to collaborate in swiftly deploying novel solutions-at scale-that bridge the gap between today’s energy system and California’s electrified and decarbonized future. The summit will also include a one-on-one conversation and Q&A between PG&E CEO Patti Poppe and Tesla (TSLA) Elon Musk, which will be a somewhat rare appearance for the busy exec at an investor event. UroGen Pharma Ltd. (URGN) will host a data event on July 27 focused on UGN-102 (mitomycin) for intravesical solution for patients with low-grade, intermediate-risk non-muscle invasive bladder cancer. The company plans to highlight topline results from the Phase 3 Atlas and Envision clinical trials. Shares of UroGen have rallied in the past after UGN-102 updates. See a detailed list of key events for next week in Seeking Alpha’s Catalyst Watch.
Quant ratings: Stocks with recent quant rating changes include Molson Coors Beverage (TAP) to Strong Buy from Hold, Darling Ingredients (DAR) to Buy from Hold, and Goldman Sachs (GS) to Hold from Buy. See the stocks with the very highest rated Seeking Alpha Quant Ratings.
Box office preview: One of the biggest movie weekends of the year will see both Warner Bros.’ (NASDAQ:WBD) Barbie and Universal’s (CMCSA) Oppenheimer open in the U.S. The dual release of major films is being dubbed “Barbenheimer” due to the rarity of potential blockbusters opening on the same weekend. Some analysts think the dual release could be complementary amid anecdotal reports of strong interest from moviegoers to see both. Barbie is expected to haul in at least $90 million in U.S. over the weekend, while Oppenheimer is forecast to bring in $54M. The weekend could be the strongest of the year for the U.S. box office, with Mission: Impossible – Dead Reckoning Part One, Spider-Man: Across the Spider-Verse, and Sound of Freedom also in the mix.
Barron’s mentions: Insurance broker Arthur J. Gallagher (AJG) is highlighted as a stock with plenty of upside left as the company continues to benefit from higher interest rates and accelerating policy renewals. Revenue for Gallagher is generated from the fees paid as a percentage of premiums, which have been moving higher with inflation. Organic revenue is forecast to be at the high end of the guidance range of 7% to 9%. Meanwhile, the company’s portfolio of premiums and claims is invested in U.S. Treasuries, which are earning higher yields. Gallagher is also noted to have doubled its earnings per share over the last five years. On a valuation check, Gallagher trades in line with its five-year price-to-earnings average of 22.8X.
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