Report for Monday, July 20
Reports for Tuesday, July 21
International Business Machines (IBM)
International Business Machines (IBM) is expected to release second-quarter 2015 results on July 20, after the market closes. Last quarter, IBM posted earnings of $2.91, decreasing from $5.81 the quarter prior. The Estimize consensus, pulling estimates from 68 different analysts, is set two cents above the Wall Street consensus of $3.80. Estimize is calling for a revenue of $20.968B, just below the Wall Street consensus of $21.001B.
For the last two years, revenue growth YoY has been negative. Moreover, seven of previous consecutive eight quarters IBM earnings have missed both the Estimize and Wall Street consensus, so it would not be a surprise if this trend continues.
Yahoo! Inc (YHOO) reports its FQ2 ’15 results after the closing bell on Tuesday. Both Estimize and Wall Street are predicting a fall in EPS year-on-year (YoY). The Estimize and Wall Street consensus is predicting an EPS figure of $0.18. The Estimize community have assumed a revenue figure of $1.029B compared to the Wall Street assumption of $1.028B. Yahoo’s stock has underperformed YTD with a negative capital return of -21.52%. The NASDAQ has managed to rise 9.77% (YTD).
Investors have begun to feel nervous due to the possible changes to how the IRS taxes corporate spinoffs. Yahoo! still has a circa $30B stake in Alibaba and any IRS changes may impact its strategy to spinoff the rest of its stake. Yahoo! successfully booked $9.4B when Alibaba successfully listed on the NASDAQ in September last year. Yahoo! CEO Marissa Mayer has recently told investors that the spinoff process is “proceeding as planned.” Investors will be eager to hear management’s comments on the spinoff and the timeframe in which the sale is expected to be completed.
Pressure continues to mount on Marissa Mayer as she approaches her 3 year anniversary as CEO. In order for Yahoo! to build momentum, Marissa will need to begin to demonstrate to investors that she has what it takes to increase Yahoo’s top line revenue growth. With a disappointing FQ1 ’15 result, Yahoo! needs a solid report tomorrow in order to stop the share price plunge.
Chipotle (CMG) reports its FQ2 ’15 after the closing bell on Tuesday. Wall Street is predicting an uplift in EPS to $4.42 and the Estimize community are forecasting EPS of $4.47. Estimize are expecting revenues to be $1.224B compared to Wall Street’s prediction of $1.216B.
Chipotle continues to struggle relative to its peers including McDonalds (MCD), Yum Brands (YUM), Sonic (SONC) and Starbucks (SBUX) year-to-date (YTD). The trendy burrito chain has been growing rapidly over the past 5 years, however analysts are expected growth to slow moving forward. In addition to the reduction in growth figures, Chipotle has been recently faced some headwinds which may hurt its bottom line. Firstly, issues with pork suppliers caused Chipotle to completely remove its pulled carnitas from the menu forcing Chipotle to identify another pork supplier from Britain. Also, increasing beef prices have likely had a negative effect on the company’s profitability through increasing costs.
Microsoft (MSFT) will also report on Tuesday afternoon when they release their FQ2 ’15 results. Year-to-date (YTD) Microsoft has underperformed the NASDAQ posting a lackluster 0.05% capital gain compared to 9.77% achieved by the index.
For the upcoming quarter, the Estimize community is predicting an EPS figure of $0.58 and a revenue target of $22.673B which is higher than Wall Street’s predictions of an EPS number of $0.39 and a revenue figure of $21.994B.
Microsoft currently has a mixed bag of fundamental drivers are present. On the one hand, Microsoft’s cloud business is a very strong positive but its PC and subscription revenues are facing pressure as the demand for PC’s globally decline. The increased desirability of smartphones and tablets is only expected to further negatively impact PC sales in the future. It is up to Microsoft to manage this transition and enable its business to thrive in the coming decade.
Finally, Investors will be interested in obtaining more information with respect to management’s recent announcement to abandon the Nokia phone business. Details with respect to the costs involved of the restructuring including worker redundancy packages will be expected.
Apple Inc (APPL)
With plenty of market anticipation, Apple Inc (AAPL) will report its FQ3 ’15 results on Tuesday this week after the closing bell. Estimize and Wall Street are assuming lower EPS and revenue numbers for FQ2 QoQ. Apple continue to be a market darling with a year-to-date (YTD) capital return of 17.21% compared to the NASDAQ index which has managed to rise 9.77%.
Estimize currently have over 400 estimates for Apple, and are expecting EPS to be $1.85 and revenues to come in at $49.320B. Wall Street, to no surprise are predicting lower figures than Estimize and forecast EPS of $1.79 and revenues of $49.092B.
Investors will be eager to hear more information regarding the company’s expansion into China. The opportunity for Apple to increase its revenues through expansion in China is significant, but does not come without risk and investors are aware of this. Domestic threats such as OnePlus and Xiaomi are potential competitors which may limit Apple’s ability to continue to accumulate market share. Further, with the current share market plunge occurring in China and falling consumer confidence, spending on luxury items such as iPhones may feel the pinch in China till all is resolved.
(Photo Credit: davidgsteadman)