MW The bar is creeping higher for second-quarter earnings
By Bill Peters
Earnings Watch: Results this week will offer a look at the media industry and the gig economy
Wall Street analysts tend to dial back their financial expectations when companies get closer to reporting quarterly results. Doing so, of course, sets a lower bar for companies to clear, and most companies, in turn, often clear it.
But one month through this year's second quarter, they're doing something a little unusual. They're getting cautiously more optimistic about corporate America's profitability.
Through last month, analysts following S&P 500 companies nudged their Q2 per-share profit estimates higher - albeit by a mere 0.7% - for the second quarter, according to a FactSet report on Friday. That's the first time Wall Street has bumped its per-share profit estimates higher during the first month of a quarter since the fourth quarter of 2021.
There's still plenty of time for those estimates to come down. And the S&P 500 Index SPX slipped a bit through April, the report noted. However, the index finished higher on Friday, as April's jobs report raised investors' expectations for an eventual interest-rate cut from the Federal Reserve.
This week in earnings
The first-quarter earnings season is four-fifths of the way through, according to FactSet, but the firm said 56 companies in the S&P 500 still report this week.
Spirit Airlines Inc. $(SAVE.AU)$ reports, as it tries to go it alone without a merger with JetBlue Airways Corp. $(JBLU)$. Tempur Sealy International Inc. $(TPX)$ reports, as it tries to recover from weaker mattress demand. Crocs Inc. $(CROX)$ will issue results as demand for its footwear stays strong. Results are also due from electric-vehicle makers Nikola Corp. $(NKLA)$ and Rivian Automotive Inc. $(RIVN)$, amid slowing electric-vehicle sales and stronger competition.
Other notable results for this week include those from Airbnb Inc. $(ABNB)$, Beyond Meat Inc. $(BYND)$, Tyson Foods Inc. $(TSN.AU)$, Palantir Technologies Inc. (PLTR) and Electronic Arts Inc. $(EA)$
The calls to put on your calendar
More media plot twists? Last week, Paramount Global (PARA) pushed out its chief executive, as drama over a potential merger continues and as much of the entertainment industry cuts costs, stays cautious on new programming, and tries to find ways to make money off streaming. This week, two more industry giants report: Walt Disney Co. $(DIS)$, which reports Tuesday, and Warner Bros. Discovery Inc. (WBD), whose results are due on Thursday.
Disney reports after the media conglomerate and its shareholders managed to keep activist investor Nelson Peltz off its board. Now, investors will likely be watching for more detail on Disney's efforts to crack down on password sharing and bring ads to streaming, as well as its plans to invest billions in its amusement parks. For WBD, BofA analysts last month said they weren't expecting any "significant surprises," amid the shakier backdrop. But they said the Olympics, along with the return of shows like "House of the Dragon," could help growth this year.
The numbers to watch
Profit and pay in the gig economy: Diners are dining out less frequently, as restaurant menu prices stay high. Groceries are still expensive. Some cities are trying to boost pay for delivery drivers. Results from Uber Technologies Inc. $(UBER)$ and Instacart $(CART)$, both on Wednesday, could offer more color on all of those trends, and how much more room consumers have to spend on ride-shares. Uber's smaller rival, Lyft Inc. $(LYFT)$, reports on Tuesday.
-Bill Peters
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May 05, 2024 10:01 ET (14:01 GMT)
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