U.S. earnings season rolls on Tuesday with more big financials on deck, but the menu is expanding to major players in other industries.
Tuesday morning, Goldman Sachs will try to shake an ennui delivered by JPMorgan Chase & Co., which cited weak investment-banking revenue Friday as it reported earnings a tick below consensus estimates. It was the only one of the four biggest banks to report so far that missed analyst expectations, as Wells Fargo & Co., Citigroup Inc. and Bank of America Corp. all topped expectations by about 4 per cent to 5 per cent, according to Thomson Reuters’ Eikon.
Goldman will be followed Wednesday by Morgan Stanley. Both are far more dependent on investment banking and trading revenue than the retail banks that delivered their beats in the past two trading days. Goldman is expected to report first-quarter earnings per share of $5.58, up 8.4 per cent from a year ago. Analysts expect revenue of $8.74 billion, up 8.9 per cent from the year prior. Goldman has beaten Street EPS expectations seven out of the last eight quarters with upside surprises ranging from 5.4 per cent to 27.7 per cent
Financials are typically the first sector to report, but they’re soon followed by major companies that give an even broader sense of how the earnings season will turn out. Three members of the Dow report Tuesday, with Johnson & Johnson and UnitedHealth Group Inc. reporting before the market opens. International Business Machines Corp. reports Tuesday afternoon.
Johnson & Johnson, which has been shedding some assets to focus on more profitable businesses, is expected to report higher first-quarter profit, led by cancer drug sales and lower costs. Investors will watch for comments on its main drugs such as Imbruvica and Xarelto, and the company’s strategy for future acquisitions. Analysts expect, on average, EPS of $2.02 on revenue of just under $19.5 billion.
UnitedHealth Group Inc, the largest U.S. health insurer, is expected to report higher first-quarter profit. Investors will watch for comments on future deals, especially in light of the multi-billion dollar mergers that rivals Aetna and Cigna are involved in. Analysts expect first quarter EPS of $2.90 on revenue just under $55 billion.
Netflix Inc. is poised for a big move Tuesday after it released first-quarter earnings after market close Monday that revealed better-than-expected new-subscriber numbers. Wall Street expected Netflix to add 6.5 million new subscribers, according to FactSet data. Netflix topped that and also said it would bring in 6.2 million more customers from April through June, one million more than analyst predictions.
Shares of Netflix jumped more than 7 percent in after-hours trading on Monday to $330.30. They are up 65 percent this year.
Netflix’s earnings of 64 cents per share were in line with the Thomson Reuters I/B/E/S mean estimate.
With files from Reuters
David Milstead