Analytics

Expert Review: Company Reporting and Global Markets

Reporting season is in full swing


Olymp Trade experts will show you how the situation has changed during the week and tell you why the bulls are so strong. Will there be a U-turn? Apparently, yes, but not soon, but prices are overheated, and a correction is maturing.

 

Positive stock increase over the past month

  • Nike  8.58%. This means that with $100 and a multiple of X20, you could have easily made $ 171.60.
  • Morgan Stanley  8.66%. This means that with $100 and a multiple of X20, you could have easily made $173.20.
  • Tesla  10.86%. This means that with $100 and a multiple of X20, it was easy to make $217.20.

 

Stock market

During the last two weeks from 19.07 to 30.07 American stock indices rose and practically renewed their historical highs. The Dow Jones went beyond 35,000 points again, the Nasdaq 100 exceeded 15,000 points, and the S&P 500 went beyond 4,400 points.

During the first week in August most of the American indices were moving in flat. Dow Jones and S&P 500 are stable. Dow is trying to stay above 35 000 and S&P is slightly above 4 400 points. As for Nasdaq 100 – bulls are trying to attack again – the index is renewing its highest highs (15 180 points).

Earnings reports:

  • 19.07 reports were submitted by IBM. The company’s second-quarter revenues were $18.75 billion, and earnings per share were $2.33. Against this background, IBM shares soared to the level of $143 per share, but subsequently, the price closed the resulting gap.
  • On 20.07, Netflix reported. Actual revenues were almost in line with the forecasted value of $7.34 billion. Earnings per share fell – falling to $2.97. The price of securities practically did not react to the published reports – the trend remained bearish.
  • On Wednesday 21.07, three large companies, Johnson & Johnson, Coca-Cola and Novartis, reported all at once. J&J’s revenue grew to $23.31 billion, Coca-Cola’s revenue also showed an increase – $10.1 billion in the second quarter, Novartis reported revenue of nearly 13 billion against a forecast of 12.5 billion.
  • On Thursday 22.07 the report was presented by Intel and Twitter. Intel reported revenues of $18.53 billion – less than last quarter ($18.57 billion), but the fact exceeded the forecast value. Meanwhile, it didn’t help the bulls – at the 23.07 open on Friday, the stock plummeted below $55. The bears continued to attack the papers the following week. Twitter also reported well. Actual revenue exceeded economists’ expectations at $1.19 billion – stocks responded with growth.
  • 26.07 Tesla’s financial report was released on Monday. Revenue and EPS were above expectations. The company’s revenue was $11.96 billion and EPS was $1.45.
  • 27.07 Reports were submitted by several large companies: Apple, Microsoft, Google, Visa, AMD, Starbucks, and 3M Company. All companies reported revenue growth. The most substantial report came from Apple who’s Revenue exceeded expectations by 11%, amounting to $81.43 billion.

Twitter’s financial performance is rather volatile. Revenue and net income have grown over the past year, but in 2019 the company earned less than in 2018 – only $260 billion. The main comparative multiples are also significantly higher than in the industry. P / E of 33.43 (Industry 23.58) P / S was 7.64 vs. 0.85 in the industry; P / B is prohibitively high at 35.94 with an average of 4.19.

 

Commodity Markets

The International Monetary Fund raised the forecast for the average oil price for 2021 to $64.7 per barrel and for 2022 to $63 per barrel. Meanwhile, analysts point to an increase in drilling activity in the United States. According to data from Baker Hughes, the number of rigs has grown to 488 units.

The market trend is still bullish. Brent crude 19.07 bounced off its trend line and continued to rise. The main obstacle for the bulls was $77,8 per barrel mark. Unfortunately for them – bulls did not succeed. The price bounced back from the level $76 and dropped to its trend line again. Right now we become the witnesses of the second attempt for the price to move up. We guess it is a good opportunity to try to join the main trend and to trade up.

 

Conclusions

Reporting season supports stock markets. Stocks are rallying, and indices are even trying to renew their highs. Meanwhile, do not forget that such growth is no longer justified, given the comparative price to earnings multiples of certain companies. Prices are too high, so it is worth getting ready for a correction sometime soon.

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