Weekly Preview: Notable Earnings (DIS, PEP, PYPL)

aA key week in the Q4 earnings season is Meta Platforms (meta) and Apple (AAPL) is doing its best to silence many skeptics while restoring energy to growth stocks. is done.

Indeed, there are still mixed opinions about where the stock will go in the next few quarters, especially after Friday’s January jobs report was higher than expected. Nonfarm payrolls increased by 517,000, according to the January jobs report, well above market expectations of 187,000. The unemployment rate he dropped to 3.4%, an estimate of 3.6%, the lowest unemployment rate in over 50 years.

With so many jobs, it’s hard to believe the US is in recession. Continued strength in the labor market has made it difficult for the Federal Reserve to become less hawkish on interest rates, explaining why stocks sold off on Friday. Dow Jones Industrial Average on Friday fell 127.93 points (0.38%) to close at 33,926.01. The blue chip index rebounded slightly after falling more than 300 points during the session. The S&P 500 Index closed 43.28 points lower at 4,136.48, with all 11 S&P sectors closing in negative territory. One of the biggest drops was at consumer discretion, where he ended the day down more than 3%. The tech-heavy Nasdaq Composite Index fell 193.86 points to close at 12,006.96, down 1.59%. The Nasdaq drop saw Tesla record his third straight win (TSLA), Apple closed the deal higher.

Investors are understandably encouraged by the strong rebound in the first month of the year despite Friday’s downday. In addition, forward his guidance announced is also encouraging. Is that optimism in place? I think this question will be answered by the end of this earnings season. Here are the stocks I’ll be watching this week, with a particular focus on earnings from Disney, Pepsi and PayPal.

Disney (DIS) – Report after the close of trading on Wednesday, February 8

Wall Street expects Disney to earn 79 cents per share on earnings of $23.36 billion. This compares with the same period last year, when earnings were $1.06 per share on earnings of $21.82 billion.

What to watch: Disney stock has underperformed significantly over the past 12 months, driven by weak consumer spending and concerns over broader macro uncertainty, with the stock hitting a 52-week high. From a low of $157 to a low of $84, it is down almost 50%. But things have changed in the last few months. In fact, 2023 looks set to be a magical year for Disney. The company’s streaming his platform, Disney+, is available on Netflix (NFLX). Netflix’s strong fourth quarter results have brought optimism to the streaming industry, suggesting that Disney+ could remain a strong growth opportunity for the company in the coming quarters. Disney executives are targeting to grow Disney+’s global subscriber base from 230 million to 260 million by the end of 2024. The market wants to know if these targets are still achievable. Its subscriber goals are impressive but would require significant investment that, if met, could impact earnings. EPS fell short of Street’s expectations. However, with total subscribers he reached 235 million, the D2C business has allowed the company to achieve higher-than-expected subscriber growth. The company also borrowed a strategy from Netflix to advertise the launch of an ad-supported tier on Disney+. At the time, then-CEO Bob Chapek commented that this was “a key component of our overall real estate advertising portfolio and advertiser interest has been strong.” Chapek has since been ousted and Robert Iger has returned as his CEO at Disney, and on Wednesday investors sought additional details about the company’s long-term growth strategy.

PepsiCo (PEPs) – Report before opening on Thursday, February 9

Wall Street expects PepsiCo to achieve EPS of $1.65 per share on earnings of $26.83 billion. This compares with the same period last year, when earnings were $1.53 per share on $25.25 billion.

What to watch: There are many reasons to be optimistic about Pepsi’s earnings and earnings prospects over the next 12-18 months. Macroeconomic headwinds, such as high inflation and disruptions in his supply chain, have impacted the company’s profit margins, but the snacks and beverages giant has maintained its “safety and value” strategy thanks to its solid execution. has successfully overcome the difficulties of establishing itself as This included raising prices in some areas while limiting production to offset the effects of inflation. In the most recent quarter, management raised earnings guidance for both his fiscal year 2022 and his fiscal year 2023. Not only is full-year revenue expected to grow by 12%, but the company boosted full-year revenue growth by a factor of 10, versus his previous guidance of 10%. %, up from 8%. The company’s price management has been praised by Wall Street. The company’s investments in new brands are beginning to pay off as it adapts to new trends. The company believes there is ample room for growth in its core snacks and beverages business, but expects beverage volume to continue growing in the mid-single digits over the next few quarters and beyond. increase. On Thursday, investors will want to see if Pepsi maintains this level of confidence to make sure its initiatives are working.

PayPal (PYPL)- report After closing on Thursday, February 10

Wall Street expects PayPal to earn $1.20 per share on earnings of $7.39 billion. This compares to the same period last year, when earnings came to $1.11 per share on his $6.92 billion earnings.

What to watch: Is the market getting too negative for PayPal? , it’s worth asking if it can give investors patience. The market expects the company to grow its revenue by 8% in 2022, but that’s not the growth rate investors expect. , falling short of PayPal’s previous record of achieving double-digit growth. The company has also been hit by slowing global growth, as well as weak consumer spending by the US economy. That said, ratings are becoming more attractive. The stock is trading at 12x EV/EBITDA, also well below its historical average of 22x. That means all the bad news and lower expectations could be priced into the stock price.The company has recently taken steps to right-size its business announcement plans to reduce its workforce by 2,000, or about 7% of its global workforce. Investors on Thursday will want to know how much value the company’s cost-cutting initiatives will create over the next 12 to 18 months, without sacrificing growth.

The views and opinions expressed herein are those of the authors and do not necessarily reflect those of Nasdaq, Inc.

https://www.nasdaq.com/articles/weekly-preview-earnings-to-watch-this-week-dis-pep-pypl Weekly Preview: Notable Earnings (DIS, PEP, PYPL)

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