Earnings This Week: Big Tech, UK banks and defence stocks – FOREX.com

Corporate earnings calendar: Oct 23 – 27

US earnings season ramps-up this week and Big Tech takes centre stage as Microsoft, Alphabet, Meta and Amazon are all due to report.

An array of other big-name stocks will be providing updates, including social media platform Snap, music streaming giant Spotify, airplane maker Boeing, beverage behemoth Coca-Cola, delivery firm UPS and media outfit Comcast. There are also reports due out from payments giants Visa and Mastercard, defence firms RTX and Northrop Grumman, telecoms business Verizon and AT&T, automakers General Motors and Ford and travel operators Southwest Airlines and Royal Caribbean Cruises. There will also be results out from oil giants Exxon Mobil, Chevron and Italian firm Eni.

UK banks will also be in the spotlight this week, when Lloyds, Barclays, Standard Chartered and NatWest report. There will be other updates out from online fashion firm ASOS, airline IAG and consumer goods firms Unilever and Reckitt Benckiser.

Outside of the UK and the US, keep an eye on, drinks maker Heineken, retailer Woolworths, airline Air France, carmakers Volkswagen and Mercedes Benz, as well as banks Santander and Deutsche Bank.

Below is an outline of all the top earnings to watch this week:

Big Tech stocks: Earnings preview

All of the five Big Tech behemoths – Microsoft, Alphabet, Meta, Amazon and Apple – are forecast to grow earnings this season, albeit at very different rates.

Advertising giants Meta and Alphabet will see the strongest recovery as the ads market shows signs of bottoming-out. Growth at Microsoft and Apple is seen as being more tepid. However, all are expected to grow their bottom-lines at a faster pace than the S&P 500 and valuations have tempered over recent months, suggesting they could continue to shine this quarter. Still, the uncertain economic outlook threatens their prospects as we approach the end of the year.

You can find out everything you need to know, including our mini previews on each firm and all the consensus numbers to watch out for, in our Big Tech Q3 Earnings Preview.

UK banks: Q3 earnings preview

The earnings season will also kick-off for UK banks this week, starting with Barclays, Lloyds and NatWest. The better-than-expected performance from US Q3 banks’ earnings often paves the way for some encouraging numbers from UK banks. While NatWest, Lloyds, and HSBC (which reports on October 30) are expected to post a year-on-year rise in pretax profit, Barclays is forecast to post a decline. 

High-interest rates have been a double-edged sword for the banks. On the one hand, higher rates have boosted Net Interest Margin NIM, the difference between interest received on loans and interest paid out on deposits. However, on the other hand, rising impairment provisions could outweigh those NIM improvements. 

With the BoE potentially at the end of its rate hiking cycle, the outlook for NIM will be in focus, particularly considering that full-year NIM guidance was set at a higher rate of 5.5%, so a downward revision could be on the cards. Any comments on this topic will be scrutinized closely. 

Loan demand will also be under the spotlight as higher borrowing costs stifle demand, as noted through recent weakness in mortgage approvals.  

Customer deposits will be another area to watch as customers react to higher interest rates by paying down debt or moving to higher-yielding assets. 

Barclays is set to underperform its sector peers, with investment banking in focus and a deeper downturn in FICC (fixed income, currency, and commodities) trading. Pretax profit is forecast to decline 3.9%. 

Meanwhile, HSBC is likely to outperform, underpinned by rising rates worldwide, with Q3 pre-tax profits expected to rise an impressive 168%. 

Keep an eye on our news and analysis page for the full UK banks preview.

RTX & Northrop Grumman: Q3 earnings preview

Defence stocks have popped from recent lows this month as conflict in the Middle East increases appetite for the sector. Notably, Lockheed Martin recently reported results and managed to keep hold of recent gains after beating expectations, suggesting others could also avoid losing the ground they have gained this month if they can avoid any negative surprises.

RTX sales are forecast to rise 9.8% from the year before to $18.6 billion in the third quarter and adjusted EPS is seen staying broadly flat at $1.21. Engine maker Pratt & Whitney and, to a lesser degree, Collins Aerospace Systems, will provide the topline growth and counter weakness from its missile, defence, intelligence and space operations. Earnings won’t grow because the topline expansion will be eaten into by higher interest costs and taxes. Pratt & Whitney is seen booking billions in charges to account for the problems with a powder used on its engines.

Northrop Grumman is forecast to report a 6.8% rise in quarterly revenue to $9.58 billion and a 1.8% decline in EPS to $5.79. All of its divisions are expected to grow sales.

Visa & Mastercard stock: Q3 earnings preview

Payments giants Visa and Mastercard both report results this week, which will not only be of interest to investors but the broader market as the pair can provide vital clues on how the US consumer and their spending habits are faring.

Visa, which said this week that chairman Alfred Kelly, who previously led the payments giant as CEO, will step down early next year and be replaced by lead independent director John Lundgren, is forecast to report a 9.9% year-on-year rise in revenue to $8.55 billion and adjusted EPS is seen climbing 16% to $2.24.

Mastercard is expected to report a 13.4% year-on-year rise in revenue to $6.52 billion and a 20.4% jump in EPS to $3.23.

General Motors & Ford stock: Q3 earnings preview

Strike action continues to hit Ford and General Motors (as well as Stellantis) and this will be the central theme this season as markets prepare to see how big a financial hit they are taking from industrial action from the United Auto Workers union.

Any breakthrough would be significant considering strikes have been going on for over a month. Plus, there is a threat that UAW will continue to expand strike action to more plants if talks don’t progress, which only weakens the industry’s prospects. Still, the trio are trying to limit the big increase in labour costs that a deal will lead to, with 20%-plus pay rises currently on the table and the UAW pushing for more.

There have been reports that General Motors is close toward agreeing a tentative deal with the UAW, according to a union negotiator speaking to Bloomberg. “All the pieces are there, we just have to glue it together,” said Mike Booth, the vice president of the GM unit of UAW. The company is forecast to report a 2.7% year-on-year rise in revenue to $43.0 billion in the third quarter and net income attributable to stockholders is expected to plunge almost 23% to $2.52 billion.

Ford is reported to have offered a larger pay rise to the UAW than what General Motors had last tabled. That could mean the reports GM and UAW are getting closer to striking a deal also bodes well for Ford. Ford is forecast to report a 10.2% rise in revenue to $40.98 billion and swing to net income of $1.77 billion from a $827 million loss the year before.

Another key theme to watch out for will be electric vehicles and the losses that it is causing traditional automakers. With prices coming down and demand showing signs of weakening, the transition to electric could become more difficult.