The US March quarter’s earnings season starts its busiest two weeks with Netflix’s figures on Tuesday expected to dominate events this week.
Besides Netflix, figures from key airlines, some techs and oil services groups will be released and are expected to show big improvements.
Earnings hopes are high for companies to show they are recovering from the pandemic or have can convince investors that profits will return, and when.
Dozens of companies are due to report, including Coca-Cola, Johnson & Johnson, Verizon Communications, Dow Chemical, American Airlines, Southwest United, CSX, Procter and Gamble, Amex, Honeywell and Mattel.
The world’s three biggest oil services groups, Schlumberger, Halliburton and Baker Hughes GE are all due to report while early results from techs will see figures from Intel and Netgear, Snap while AT&T will join Verizon and releasing figures that will show how the telco and streaming video and broadband businesses are going.
But it will be Netflix’s March quarter figures that will do much to either bolster or weaken investor sentiment.
Netflix helped boost Wall Street sentiment in January after it beat forecasts for subscriber growth and total revenue in the fourth quarter, adding 8.5 million new subscribers to reach a global total of 203.7 million.
That topped company guidance for 6 million new customers in the fourth quarter and caps a remarkable 2020, when Netflix added about 37 million subscribers. Revenue for the 4th quarter hit $US6.6 billion.
Netflix did surprise by revealing it expects to be cash-flow positive from 2021 onward and expects this year to be cash-flow neutral. The company also said it might explore returning cash to shareholders through stock buybacks, which it did from 2007 to 2011.
The target forecast it will add 6 million new subscribers in the three months to March. It also forecast a 24% lift in revenue for the quarter. The surge in subscriptions last year was undoubtedly driven by the pandemic, and the question for 2021 and beyond, will the leasing of the restrictions reduce its growth, along with increased competition from the likes of Disney +, Amazon and Apple TV.
Nextflix shares are up just 1% so far in 2021, underperforming the S&P 500’s 11.4% gain as investors have switched away from techs to value stocks and been more influenced by the rising number of Covid vaccinations which have eased the pressures for more lockdowns.
In his weekend note, AMP chief economist, Shane Oliver said the US March quarter earnings reporting season “is already off to a good start with bank results and will ramp up in the week ahead with the current consensus now being for a 28% rise in earnings per share on a year ago – this has already been revised from +21% a week ago but is likely to ultimately come in at around +35% to +40%.”