By: Spencer Israel
This is the week that the Q4 earnings season really shifts into high gear. A number of Dow components are slated to report, including Boeing, Verizon, McDonald’s, Chevron, and Caterpillar.
But without a doubt, the story of the week will be tech earnings. Here’s a preview of what to expect from the biggest earnings reports this week.
If recent history is a guide, Microsoft will most likely beat the consensus estimates. Microsoft hasn’t reported an EPS figure below estimates since March 2016, a stretch of 18 quarters. It’s also only missed its revenue figure twice in that span.
The crown jewel of the company continues to be its Intelligent Cloud unit. Though the growth rate for Azure is slowing, it was still the largest segment in Microsoft’s most recent report.
The 7-day Implied Volatility (expected move) for Microsoft is 4%. The stock has opened lower the morning after its last two earnings reports by an average of 2.45%.
AMD is coming off a quarter in which it reported revenue of $2.8 billion, a 55% year-over-year increase and the highest in the company’s history.
For Q4, the company has said it expects revenue to be between $2.9-3.1 billion. That would represent an approximately 40% year-over-year increase.
The 7-day Implied Volatility (expected move) for AMD is 8.6%. The stock has opened lower the morning after five of its last six earnings reports.
Facebook is coming off a quarter in which Daily Active Users rose year-over-year but fell quarter-over-quarter.
The company expects that deceleration to continue, guiding flat-to-down DAU and MAU growth this time around.
Total advertising revenue grew 22% year-over-year in Q3, and the company said during its last earnings call it expects that growth rate to increase in Q4. That would mean advertising revenue would have to exceed $25.89 billion to meet the company’s guidance.
The 7-day Implied Volatility (expected move) for Facebook is 7%. The stock has opened higher the morning after its nine of last 12 earnings reports.
The headline of Apple’s last report was weak iPhone sales and stronger-than-expected results from the Mac, iPad, Wearables, and Services segments.
The company chose not to issue guidance due to pandemic uncertainty, but investors will surely want to see iPhone sales recover. Apple also hasn’t missed its EPS estimate in 19 straight earnings reports dating back to March 2016.
The 7-day Implied Volatility (expected move) for Apple is 6.4%. The stock has opened higher the morning after eight of its last 12 earnings reports.
With Tesla, it’s usually about deliveries. The company previously reported it was able to meet its 2020 goal to deliver 500,000 vehicles. Now all eyes will turn to what the company projects for its 2021 deliveries guidance, both in the U.S. and in China
Profitability will also be notable. In its last report, Tesla reported a fifth straight quarter of profitability, which led to the company’s inclusion in the S&P 500.
The 7-day Implied Volatility (expected move) for Tesla is 8%. The stock has opened higher the morning after its last five earnings reports by an average of 8.56%.
The author is long the S&P 500 in his retirement account
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