Earnings Watch: Expectations, US regional banks, and Tesla earnings Earnings Watch: Expectations, US regional banks, and Tesla earnings Earnings Watch: Expectations, US regional banks, and Tesla earnings

Earnings Watch: Expectations, US regional banks, and Tesla earnings

Equities 4 minutes to read
Peter Garnry

Chief Investment Strategist

Summary:  The Q1 earnings season is kicking into gear this week with several important earnings releases with the most notable earnings being those from Netflix, US Bancorp, Tesla, ASML, and CATL. Earnings estimates for 2023 have been coming down ahead of the Q1 earnings but estimates still show growth is expected this year suggesting little weight is put on the recession call. Finally, we reflect on earnings today from Charles Schwab which was under pressure during the recent banking crisis.


Earnings expectations going into Q1

The Q1 earnings season has started and thus it is important to begin tracking how Q1 earnings releases are impacting earnings estimates for the coming quarters. If we look at S&P 500 earnings estimates for Q2, Q3, and Q4 this year, which are the ones that really matters now, then we can see that analysts have revised down their estimates for Q2 and Q3 since mid-February while raising the estimate for Q4. The figures also show that analysts expect earnings in Q4 to be 6.7% higher than in Q2 signalling no signs among equity analysts that a recession is incoming. Today’s significant positive surprise in the US April Empire Manufacturing figure might be suggestive of the economy just continuing to hum along.

Netflix to set sentiment in technology stocks

This week the Q1 earnings season gets very important with key earnings from Netflix on Tuesday which will set the stage for sentiment in technology stocks ahead of next week’s technology earnings. Analysts expect Netflix to report revenue growth of 4% y/y in Q1 and EPS of $2.87 down 10% from a year ago. Netflix is in the midst of a turnaround case which involves less password sharing for higher revenue monetisation, an advertisement-based model generating revenue of customers that do not want a subscription, and finally less own content production to reduce investment needs. All these actions are positive for shareholder creation.

Charles Schwab sees massive drop in deposits in Q1

This week the market will also focus on US regional banks and among the most important ones to track is US Bancorp reporting on Wednesday. Charles Schwab, which was under pressure during the recent banking crisis, has reported today Q1 net revenue in line with estimates and EPS of $0.93 vs est. $0.90. But the US broker also reported Q1 deposits that declined to $325.7bn down from $366.7bn in Q4 2022 and down from $465.9bn a year ago highlighting that the US broker has been hit hard on the funding side. Charles Schwab notes that Q1 money market fund assets are $358bn vs $143bn a year ago. Charles Schwab shares are up 3% in pre-market trading.

Charles Schwab share price | Source: Saxo

Key earnings next week from Tesla, ASML, CATL

This week the three most important earnings releases are from Tesla and ASML on Wednesday and CATL on Thursday. Tesla has reported its Q1 delivery figures so the market will be obsesses about any guidance on Q2 and generally forward demand. Analysts expect Tesla to report 25% y/y revenue growth in Q1 and EBITDA of $4.4bn vs $4.5bn a year ago as recent price cuts will make it difficult to expand the operating margin.

ASML sits in the middle of the massive investment boom in semiconductor manufacturing in the US due to the US CHIPS Act signed last August and which according to the FT is fueling significant investment commitments already. Due to the nature of ASML being an order driven business quarterly figures can change wildly and analysts expect revenue growth of 79% y/y, but investors will more pay attention to the expected revenue growth for the fiscal year which is currently 25% in FY23.

CATL is the world's largest EV battery maker and is thus riding the tailwind of EV adoption which is happening at a blistering pace. Analysts expect revenue growth of 54% y/y in Q1 and current estimate for Q2 revenue growth if 41% y/y. With lithium carbonate prices coming down batteries are expected to decline in price accelerating EV adoption even more. Investors will also focus on any comments about CATL’s partnerships with Ford and Tesla to build out EV battery manufacturing in the US.

The remaining important earnings releases are highlighted below.

  • Monday: Eve Energy, Exor, Charles Schwab
  • Tuesday: Ericsson, Johnson & Johnson, Bank of America, Netflix, Lockheed Martin, Goldman Sachs, Intuitive Surgical
  • Wednesday: Metro, ASML, Heineken, Tesla, Abbott Laboratories, Morgan Stanley, IBM, Lam Research, US Bancorp
  • Thursday: CATL, Tryg, Nokia, Sartorius, Volvo, Philip Morris, AT&T, Union Pacific, American Express, Blackstone, CSX, DR Horton
  • Friday: Jinko Solar, SAP, Sandvik, Investor, Procter & Gamble, Schlumberger, Freeport-McMoRan

Quarterly Outlook 2024 Q3

Sandcastle economics

01 / 05

  • Macro: Sandcastle economics

    Invest wisely in Q3 2024: Discover SaxoStrats' insights on navigating a stable yet fragile global economy.

    Read article
  • Bonds: What to do until inflation stabilises

    Discover strategies for managing bonds as US and European yields remain rangebound due to uncertain inflation and evolving monetary policies.

    Read article
  • Equities: Are we blowing bubbles again

    Explore key trends and opportunities in European equities and electrification theme as market dynamics echo 2021's rally.

    Read article
  • FX: Risk-on currencies to surge against havens

    Explore the outlook for USD, AUD, NZD, and EM carry trades as risk-on currencies are set to outperform in Q3 2024.

    Read article
  • Commodities: Energy and grains in focus as metals pause

    Energy and grains to shine as metals pause. Discover key trends and market drivers for commodities in Q3 2024.

    Read article

Disclaimer

The Saxo Bank Group entities each provide execution-only service and access to Analysis permitting a person to view and/or use content available on or via the website. This content is not intended to and does not change or expand on the execution-only service. Such access and use are at all times subject to (i) The Terms of Use; (ii) Full Disclaimer; (iii) The Risk Warning; (iv) the Rules of Engagement and (v) Notices applying to Saxo News & Research and/or its content in addition (where relevant) to the terms governing the use of hyperlinks on the website of a member of the Saxo Bank Group by which access to Saxo News & Research is gained. Such content is therefore provided as no more than information. In particular no advice is intended to be provided or to be relied on as provided nor endorsed by any Saxo Bank Group entity; nor is it to be construed as solicitation or an incentive provided to subscribe for or sell or purchase any financial instrument. All trading or investments you make must be pursuant to your own unprompted and informed self-directed decision. As such no Saxo Bank Group entity will have or be liable for any losses that you may sustain as a result of any investment decision made in reliance on information which is available on Saxo News & Research or as a result of the use of the Saxo News & Research. Orders given and trades effected are deemed intended to be given or effected for the account of the customer with the Saxo Bank Group entity operating in the jurisdiction in which the customer resides and/or with whom the customer opened and maintains his/her trading account. Saxo News & Research does not contain (and should not be construed as containing) financial, investment, tax or trading advice or advice of any sort offered, recommended or endorsed by Saxo Bank Group and should not be construed as a record of our trading prices, or as an offer, incentive or solicitation for the subscription, sale or purchase in any financial instrument. To the extent that any content is construed as investment research, you must note and accept that the content was not intended to and has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such, would be considered as a marketing communication under relevant laws.

Please read our disclaimers:
Notification on Non-Independent Investment Research (https://www.home.saxo/legal/niird/notification)
Full disclaimer (https://www.home.saxo/legal/disclaimer/saxo-disclaimer)
Full disclaimer (https://www.home.saxo/legal/saxoselect-disclaimer/disclaimer)

Saxo Bank (Schweiz) AG
The Circle 38
CH-8058
Zürich-Flughafen
Switzerland

Contact Saxo

Select region

Switzerland
Switzerland

All trading carries risk. Losses can exceed deposits on margin products. You should consider whether you understand how our products work and whether you can afford to take the high risk of losing your money. To help you understand the risks involved we have put together a general Risk Warning series of Key Information Documents (KIDs) highlighting the risks and rewards related to each product. The KIDs can be accessed within the trading platform. Please note that the full prospectus can be obtained free of charge from Saxo Bank (Switzerland) Ltd. or the issuer.

This website can be accessed worldwide however the information on the website is related to Saxo Bank (Switzerland) Ltd. All clients will directly engage with Saxo Bank (Switzerland) Ltd. and all client agreements will be entered into with Saxo Bank (Switzerland) Ltd. and thus governed by Swiss Law. 

The content of this website represents marketing material and has not been notified or submitted to any supervisory authority.

If you contact Saxo Bank (Switzerland) Ltd. or visit this website, you acknowledge and agree that any data that you transmit to Saxo Bank (Switzerland) Ltd., either through this website, by telephone or by any other means of communication (e.g. e-mail), may be collected or recorded and transferred to other Saxo Bank Group companies or third parties in Switzerland or abroad and may be stored or otherwise processed by them or Saxo Bank (Switzerland) Ltd. You release Saxo Bank (Switzerland) Ltd. from its obligations under Swiss banking and securities dealer secrecies and, to the extent permitted by law, data protection laws as well as other laws and obligations to protect privacy. Saxo Bank (Switzerland) Ltd. has implemented appropriate technical and organizational measures to protect data from unauthorized processing and disclosure and applies appropriate safeguards to guarantee adequate protection of such data.

Apple, iPad and iPhone are trademarks of Apple Inc., registered in the U.S. and other countries. App Store is a service mark of Apple Inc.