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Earnings Calendar: Feb 6 – 10

The calendar remains busy as we dive deeper into earnings season. The headline events pencilled in the US calendar are results out from media giant Disney, cruise line operator Royal Caribbean, payments giant PayPal, soft drinks maker Pepsi, trading platform Robinhood, social media platform Pinterest and gaming outfit Activision Blizzard.

Elsewhere, we will have updates out from Japanese gaming behemoth Nintendo, German chemicals giant Linde, Dutch outfit Qiagen, French personal care group L’Oreal and Swiss bank Credit Suisse.

In the UK, the main earnings to watch out for will be out from oil giant BP, packaging company Smurfit Kappa, consumer goods firm Unilever, pharmaceutical company AstraZeneca, and housebuilders Barratt Developments and Redrow.

BP (BP)

We will see profits ease in the fourth quarter from the peaks we saw in mid-2022 following the softening in oil prices, weaker refining margins and tougher conditions for its gas trading arm. Still, BP will join its peers by delivering record annual profits for 2022. If it meets expectations in the fourth quarter, then BP will see annual underlying replacement cost profit more than double from 2021 to $27.72 billion. Gas is where the biggest potential for a surprise lies, with Shell’s comparative division having impressed when it went first with its results. BP continues to generate large amounts of cash, but investors are focused on how much will feed back to them through buybacks and dividends. BP has other things to pay for, such as its recent acquisition of Archaea and paying down debt, and this is leaving less of a surplus to return to investors.

Disney (DIS)

This could be a tough quarter for Disney. Revenue growth has stalled, earnings are under pressure and Disney+ is expected to lose around 400,000 subscribers. That comes at a time when activist investor Nelson Peltz is pushing for change at the House of Mouse, which is has said it doesn’t need his help or understand the business. Revenue is forecast to rise 7.2% from last year to $23.4 billion and adjusted EPS is expected to fall for a second consecutive quarter, this time by 28%, to $0.76. Disney+ is expected to end the quarter with 163.8 million subscribers but this will be countered by growth at ESPN+ and Hulu, which should hit 74.7 million subscribers. Disney has already signalled that it needs to make streaming profitable, but that will become all the more difficult if subscriber growth starts to stall.

Uber (UBER)

Uber needs to convince investors that demand can hold up in 2023, especially as fears of recession build. Wall Street expects gross bookings to climb 19% from last year to $30.7 billion. While strong, that would mark the sixth consecutive quarter of slower growth as food delivery demand continues to ease after exploding during the pandemic and the recovery seen in ride-hailing has begun to moderate. Even its freight business, which has been delivering year-on-year sales growth of 200% to 400% over the past year, will see that grind to 55% in the fourth quarter. Revenue is forecast to rise 47% to $8.5 billion and adjusted Ebitda is expected to come in at $618.6 million, marking a new record as profitability continues to improve. However, tighter margins in its food delivery and freight divisions could weigh on earnings. Things are expected to remain tough in 2023 but Uber should keep growing its topline as it continues to expand, and profitability should improve markedly. The outlook for the first quarter of 2023 will be influential, with markets looking for gross bookings of $31.8 billion and adjusted Ebitda of $609.6 million.

Royal Caribbean (RCL)

Royal Caribbean has rallied in early 2023 as investors hope it can keep up the momentum after producing its first adjusted profit since the start of the pandemic in the last quarter. However, it has already warned it will report a loss of $1.30 to $1.50 per share this quarter, with analysts hoping it will come toward the lower end at $1.32. Analysts believe the cruise line operator will report revenue of $2.6 billion. The company has said it could deliver record-adjusted Ebitda in 2023 thanks to strong early booking trends for 2023, so the key is demonstrating that this will remain the case in the face of macroeconomic headwinds and a possible recession on the horizon.

Pinterest (PINS)

The digital advertising market remains tough as marketing budgets are curtailed in the uncertain environment. No company has proven immune, but social media stocks have proven particularly vulnerable. Still, Pinterest has proven more resilient to headwinds such as Apple’s privacy policy changes that have made it more difficult to target ads at users than other platforms. User numbers in North America are forecast to grow for the first time in seven quarters, although Europe remains challenging. Overall Monthly Active Users are expected to rise 4.4% from last year to 449.8 million. Wall Street forecasts the company will report a 4.8% year-on-year rise in revenue to $887.2 million and believe adjusted Ebitda will plunge 48% to $181.0 million.

PayPal (PYPL)

PayPal is expected to see total payment volumes continue to grow in the fourth quarter, but at a slower pace than we have seen in recent quarters as consumer spending slows, which has also resulted in a similar trend at the likes of Visa and Mastercard. PayPal has already revised down its annual revenue growth target to 10% because of weaker e-commerce demand, while cross-border volumes have also struggled. However, it also raised its EPS target to $4.07 to $4.09 for the year as it purges unprofitable clients and improves its operational efficiency. Wall Street forecasts net revenue will rise 7.1% to $7.4 billion and see a 7.7% increase in adjusted EPS to $1.20. Cashflow and buybacks will be under the spotlight. Wall Street believes things will improve in 2023, with revenue growth to see a mild acceleration and EPS to return to growth thanks to easier comparatives.

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