The US’ Companies EPS Forecast for the II Quarter

A new season of corporate reports begins in the US

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IBM

Report release: 18/07/2018
Average forecast: neutral (moderately positive)
Factors:

1. Low growth rates of the company. Over the past 24 quarters, IBM has made a profit only 4 times. The forecast for earnings per share (EPS) is $ 3.05, with the previous value of $ 2.45 (which was $ 0.03 above the forecast). The forecast for the quarterly revenue is close to that in the previous year ($ 19.45-19.94 billion)

2. IBM’s active participation in various crypto projects including: educational courses on blockchain in India, a strategic alliance to conduct collaborative research in a range of high-end defence technologies (a $ 740 million cooperation agreement was signed for 5 years), a contract to design a prototype of a blockchain-based filing system for the state of Delaware in a deal worth $738,000.

Results: $ 3.08 ↑

 

Microsoft

Report release: 19/07/2018
Average forecast: positive
Factors:

1. High growth rates of the company. The company has incurred losses in just one quarter since 2017. The forecast for earnings per share (EPS) is $ 1.08, with the previous value of $ 0.95 (which was $ 0.1 above the forecast). The forecast for the quarterly revenue is $ 29.23 billion, which is almost $ 3.5 billion higher than the forecasts for the last 2 quarters.

2. The success of technological solutions and products: the revenue in the Surface division was $ 1.09 billion for three months since March 31, which is 32% more than the values of the previous year. Microsoft is apparently planning to take on Apple’s inexpensive iPad with a new low-cost Surface tablet line.

3. An increasing demand for the Microsoft Azure Blockchain Workbench cloud service, as well as increasing the company’s share in the blockchain projects (including the Adents NovaTrack blockchain-based track and trace platform for fighting counterfeit imports of pharmaceutical products).

Results: $ 1.14 ↑

 

Google

Report release: 23/07/2018
Average forecast: neutral (moderately positive)
Factors:

1. Moderate growth rate of the company. The company has incurred losses only once over the past 3 years. The forecast for earnings per share (EPS) is $ 9.67, with the previous value of $ 13.33 (which was $ 4.05 higher than the forecast). The forecast for the quarterly revenue is $ 25.85 billion, which is close to the average value of the company’s quarterly income for the last 2 years.

2. Mixed rhetoric amid problems with Android and fines: Google will have to pay another fine for for using its Android smartphone software to stifle competition. Last year, the fine was about $ 2.4 billion, this time the amount will have been determined by the end of July and, according to forecasts, it can be even higher. In addition, due to the restrictions on advertising, which Google has introduced this year, the company’s potential losses are still being estimated.

 

Boeing

Report release: 25/07/2018
Average forecast: neutral
Factors:

1. The company has incurred losses just once for 3 years. The forecast for earnings per share (EPS) is $ 3.46, with the previous value of $3.64 (which was $1.06 above the forecast). The forecast for the quarterly revenue is $23.86 billion, which is the average value for the last 3 years.

2. Despite an increased demand for Boeing 787 (model 787-10) and Boeing 737, the company may incur substantial losses due to the impossibility of completing the deal it signed to sell 300 planes to China Aviation Supplies Holding Company worth $37 billion.

 

Facebook

Report release: 25/07/2018
Average forecast: positive
Factors:

1. High growth rates of the company. The forecast for the quarterly revenue is up to $13.29 billion, which is $1.32 billion higher than the previous quarterly value. The forecast for earnings per share (EPS) is $ 1.71, with the previous value of $1,69.

2. There is high open interest in call options for shares of the company with the strike prices of $ 202.5 and $ 205 and expiration date of 27/07/2018. This may indicate potential investors’ confidence in the growth of the quotations after the publication of the report.

3. Analysts note that Instagram, a product line by Facebook, is developing successfully. Facebook’s financial data can neutralize the situation with the investigations related to the American election meddling.

 

Coca-Cola

Report release: 25/07/2018
Average forecast: neutral (moderately positive)
Factors:

1. Analysts forecast the company’s profit to increase to $ 8.58 billion. The revenue for the previous quarter was $7.62 billion. The forecast for earnings per share (EPS) is $ 0.6, with the previous value of $ 0.47. However, it is necessary to pay attention to the reduction in profits compared to the same quarter in the previous year. In addition, the company’s debt is increasing.

2. There is an increased open interest in call options with a strike price of $ 46 and expiration date of 27/07/18.

 

Visa

Report release: 25/07/2018
Average forecast: positive
Factors:

1. According to economists, the company’s revenue in the second quarter should reach $ 5.09 billion (the profit in the first quarter was $ 5.07 billion). If you take into account the World Cup, the values may be higher than in the forecast. The forecast for earnings per share (EPS) is $ 1.09.

2. Visa’s transaction volume significantly exceeds the transaction volume of the company’s main competitors, which is a positive factor.

3. Investors continue to stock up on call options contracts, which indicates the bullish mood of the market participants.

 

Starbucks

Report Release: 26/07/2018
Average forecast: neutral (moderately negative)
Factors:

1. The company’s financial results in the second quarter may be small as soon as Starbucks plans to close 150 coffee shops in the US. In addition, investors could pay attention to the downgrade of the company’s rating by S & P agency from A- to BBB + and the risks of Starbucks in China due to the strengthening of protectionism policy (Starbucks controls more than 50% of China’s coffee segment). The forecast for earnings per share (EPS) is $ 0.61.

2. A secondary negative factor is investors’ expectations. There is the investors’ survey on the prospects of catering companies for the second quarter of this year in the analytical review made by the Stifel company. The majority of respondents evaluated the prospects of Starbucks negatively, answering that the company’s results are likely to be worse than expected.

 

McDonalds

Report Release: 30/07/2018
Average Forecast: neutral (moderately positive)
Factors:

1. High growth rates. Since July 2015, the company has received revenue below the expectations only once, in the second quarter of 2016. The forecast for earnings per share (EPS) is $ 1.93, with the previous value of $ 1.79 (which was $ 0.12 above the forecast). The forecast for the quarterly revenue is equal to that for the fourth quarter of the previous year ($ 5.34 billion).

2. The company’s capitalization has increased by 7.8% to $ 127.5 billion for the last three months.

3. The world’s largest chain of fast-food restaurants intends to reduce the number of the leadership levels in order to simplify its corporate structure and save money. This measure is aimed at helping reduce administrative costs by $ 500 million by 2019. Thus, McDonald’s plans to increase its competitiveness in the US market, where it is increasingly difficult for the company to compete with Burger King and Wendy’s, which offer discounts and promotions.

 

Apple

Report Release: 31/07/2018
Average forecast: neutral (moderately positive)
Factors:

1. Moderate growth rate of the company. The forecast for earnings per share (EPS) is $ 2.16, with the previous value of $ 2.73 (which was $ 0.04 above the forecast). The forecast for the quarterly revenue is $ 52.28 billion, which is close to the company’s average quarterly data for the last 2 years.

2. Along with ten suppliers, Apple will invest in a $ 300 million fund in China to connect suppliers with renewable energy sources. This step shows the commitment of the American technology giant to business development in China, despite the tensions in Washington-Beijing relations. The fund will invest in and develop clean energy projects totaling more than 1 gigawatt of renewable energy in China.

3. Consumers spending in the App Store amounted to $ 42.5 billion in 2017, and this year the company expects this value to increase to $ 53.1 billion.

 

Tesla

Report Release: 01/08/2018
Average Forecast: neutral (moderately negative)
Factors:

1. The forecast for earnings per share (EPS) is $ 2.71, with the previous value of $3.35 (the loss was $ 0.18 below the forecast). At the same time, the forecast $ 4.17 billion quarterly revenue is almost twice bigger than the average value for the past two years.

2. In May, Tesla reported record losses of $ 509.5 million the company incurred in the first quarter of 2018. It also reported that in the third quarter of this year Tesla plans to achieve profitability, but to do that, it is necessary to produce 5,000 Tesla Model 3 on a weekly basis. To reduce losses from the release of the new model, Elon Musk cut 9% of the company’s workforce. In early July, Tesla’s CEO said that the company hit its goal and Tesla Model 3 electric vehicle output reached 5,000 for a week.

3. Martin Tripp, the ex-Tesla employee filed a complaint with the Securities and Exchange Commission. According to Tripp, Tesla overstated to investors the number of Model 3 vehicles being produced each week by as much as 44%; batteries with puncture holes were installed into Tesla vehicles; and the company systematically reused scrap and waste parts in vehicles.


Attention! Forecasts are quoted from the Investing.com website.


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