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A man looks through jobs at a Resource Canada offices in Montreal.Ryan Remiorz/The Canadian Press

Smartphones, car parts and insurance will be in the earnings spotlight this week as second-quarter results continue to roll in, while on the economics front all eyes will be on Canadian and U.S. employment figures for July.

After Rogers Communications Inc. topped estimates last month, driven by a healthy gain in postpaid wireless subscribers, investors will turn their attention to rivals BCE Inc. and Telus Corp., which are set to report before markets open on Thursday and Friday, respectively.

Shares of both companies have been rising in anticipation of a solid quarter, but if results don't live up to expectations investors could take their profits and run.

"BCE and Telus are expected to lead the incumbents in wireless EBITDA (earnings before interest, taxes, depreciation and amortization) growth," analyst Jeff Fan of Scotia Capital said in a second-quarter preview released in early July.

He expects BCE to add a net 58,000 postpaid wireless customers and Telus to gain 60,000 (compared with 24,000 for Rogers, which snapped two quarters of losses). Postpaid subscribers are watched closely because they are more lucrative than customers who prepay for wireless services.

Mr. Fan also expects that BCE and Telus will both report EBITDA growth in their wireline divisions that include broadband Internet and TV services.

Overall, analysts surveyed by Bloomberg expect BCE to report adjusted earnings per share of about 87 cents, up 6.6 per cent from a year earlier, while Telus is expected to post adjusted earnings of about 66 cents, up 4.4 per cent.

Also up this week are second-quarter results from auto parts makers Linamar Corp., which reports after the close on Wednesday, and Magna International Inc., which follows on Friday morning.

RBC Dominion Securities analyst Steve Arthur said in a research note that the falling Canadian dollar will pose a headwind to Magna, which reports in U.S. dollars, and could result in "slightly reduced" guidance from the company. However, he said investors will "largely look past this" as they focus on Magna's strong "underlying operating performance, with solid margins in North America and Asia, and continued improvement in Europe."

In addition to the weak loonie, the sale of Magna's interiors division and the temporary shutdown of Chrysler's minivan plant will also weigh on Magna's revenue in the quarter, he said.

Other companies reporting this week include Sun Life Financial Inc. after markets close on Wednesday, and Manulife Financial Corp. and Great-West Lifeco Inc. on Thursday morning. In the United States, the earnings calendar includes Walt Disney Co. and Kellogg Co. on Tuesday, and Time Warner Inc. on Wednesday.

So far, U.S. second-quarter earnings season has been a good news, bad news story.

The good news is that, with 354 of S&P 500 members having reported to date, 73 per cent have posted earnings above the mean analyst estimate – in line with the five-year average, according to FactSet. The bad news is that on a blended basis – that is, combining actual results for companies that have reported with estimates for those that haven't – second-quarter S&P 500 earnings are poised to decline by 1.3 per cent year-over-year.

If earnings are still down when all the numbers are in, it would mark the first year-over-year drop for S&P 500 profits since the third quarter of 2012, when they slipped 1 per cent, FactSet said. The energy sector has posted the biggest decline in aggregate earnings (down 57 per cent), while health-care companies have reported the biggest increase (up 14.7 per cent).

"The market will likely continue to watch for comments from companies regarding the impact of slower global economic growth, lower oil and gas prices, and the stronger U.S. dollar on earnings and revenues," FactSet said.

The extent to which these factors may have affected employment will also become clearer when Canadian and U.S. jobs figures are released on Friday.

Economists on average expect that the United States added 225,000 jobs in July, up slightly from the 223,000 gain in June. The report will be watched closely as it could influence when the Federal Open Market Committee decides to start its long-awaited "liftoff."

"Our call for [200,000] net new jobs is a shade below consensus, but good enough to keep us leaning towards the first Fed hike in September," Avery Shenfeld, chief economist with CIBC World Markets, said.

In Canada, CIBC expects the economy to have shed 10,000 jobs in July, following a decline of 6,400 in June. "A second consecutive negative print would be supportive for bonds and negative for the [Canadian dollar]," he said.

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Tickers mentioned in this story

Study and track financial data on any traded entity: click to open the full quote page. Data updated as of 18/03/24 4:00pm EDT.

SymbolName% changeLast
BCE-N
BCE Inc
-0.58%34.2
BCE-T
BCE Inc
-0.64%46.31
CM-N
Canadian Imperial Bank of Commerce
+0.73%49.6
CM-T
Canadian Imperial Bank of Commerce
+0.72%67.17
DIS-N
Walt Disney Company
+1.7%113.85
GWO-T
Great-West Lifeco Inc
+0.21%42.57
K-N
Kellanova
+2.26%54.77
LNR-T
Linamar Corp
-0.78%69.7
MFC-N
Manulife Financial Corp
-0.33%24.07
MFC-T
Manulife Fin
-0.21%32.6
MG-N
Mistras Group Inc
+0.45%8.95
MG-T
Magna International Inc
-0.01%71.09
MGA-N
Magna International
-0.02%52.51
MGA-T
Mega Uranium Ltd
-2.6%0.375
RCI-N
Rogers Communication
-0.87%42.21
SLF-N
Sun Life Financial Inc
-0.18%54.53
SLF-T
Sun Life Financial Inc
-0.15%73.86

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