Earnings Calendar: Dec 12 – 16

The earnings calendar is light this week but there are still some big names in play.

The US calendar will be headlined by results from database manager Oracle, creative software maker Adobe, professional IT services outfit Accenture, and housebuilder Lennar.

In the UK, we will have updates from sensor maker Chemring, electronics retailer Currys, and content software specialist RWS Holdings.

Below is an outline of all the key earnings to watch next week:

Oracle (ORCL)

Wall Street forecasts Oracle will report a 16% year-on-year rise in revenue in the second quarter of its financial year to $12.01 billion and believes adjusted EPS will dip 2.5% to $1.18. Much of the improvement from last year will be down to the boost provided by Cerner, which Oracle purchased for around $28 billion back in July. That should counter any softness from the tough macro environment and the strong dollar. Its cloud-related income should remain resilient but will be closely watched amid signs that businesses are starting to moderate spending on IT systems, but its cloud services and licence support segment that generates over 40% of revenue is forecast to grow sales by 14%, with license and on-premise support sales to rise 4.9%. Hardware sales are expected to remain broadly flat, with services emerging as the bright spot with analysts expecting a 74% jump in revenue. Its adjusted operating margin is pencilled-in to come in at 41.6%, up from 39.1% in the most recent quarter but down from last year thanks to the acquisition of Cerner and rising costs.

Adobe (ADBE)

It is set to be another quarter of record revenue for Adobe as demand for its software and subscriptions continues to grow, with earnings also forecast to climb higher. However, topline growth is slowing down compared to what we saw during the better times in 2021. Wall Street forecasts revenue will rise over 10% from last year in the fourth quarter of its financial year to $4.52 billion, driven by strong double-digit growth across its digital media and digital experience segments. Subscriptions are set to be the main driver of topline growth and rise 10.6% from last year, according to consensus figures. Annual recurring revenue, as a result, is set to improve 14.7% to $13.9 billion while remaining performance obligations – representing the value of work contracted yet to be completed – are expected to rise 10.7% to $15.48 billion. Adjusted EPS is expected to climb 9.5% to $3.50. Expect an update on the pending acquisition of Figma, although don’t expect this to make any contribution toward the financials for some time.

Accenture (ACN)

Wall Street forecasts that Accenture will report a 4.2% year-on-year rise in revenue in the first quarter of its new financial year to $15.59 billion and is expecting adjusted EPS to rise 4.4% to $2.90. Accenture has been posting impressive growth in new bookings that has underpinned its outlook over the next year, although the 22%-plus growth seen in the last quarter is expected to brake to just 2.9% when it reports this week, primarily because of a slowdown in consulting (although outsourcing will slow too). Investors will be keen to see how Accenture feels about its prospects as we approach 2023, having said it is aiming to deliver 8% to 11% annual revenue growth at constant currency and around a 6% increase in EPS.

Lennar (LEN)

Lennar is expected to continue delivering houses and work through its backlog when it reports this week, but the number of new orders is forecast to decline for a second consecutive period as consumers pullback on big decisions amid higher interest rates and the uncertain economic outlook. The number of deliveries is forecast to climb some 14% from last year, but new orders are expected to be down 12.7%. More deliveries twinned with fewer orders will see its backlog decline although, at over $18.5 billion, it still has a healthy amount to work with. Diluted EPS is forecast to rise 25% to $4.89 as elevated prices counter any inflationary pressure. However, Lennar is determined to be aggressive with prices and incentives in order to revive order growth, which may negatively impact its margin going forward.

Chemring (CMGMY)

Chemring, which makes high-tech sensors and countermeasure systems, has already said that trading during the year to the end of September was in line with expectations despite tough macroeconomic conditions. Analysts forecast Chemring will report a 12% rise in annual revenue to £440.7 million and a 11.6% rise in adjusted Ebitda to £85.2 million. Underlying pretax profit is expected to climb 13.9% to £63.7 million. Chemring said in October that it had won a number of significant orders that allowed its order book to close at £678 million at the end of September, up from £488 million at the end of April. That has also been flattered by around £40 million by the strong US dollar. Chemring said its order cover for the new 2023 financial year is building with 93% of expected revenue from countermeasures already covered, but focus will be on sensors considering just 60% of expected revenue is currently booked-in.

Currys (DSITF)

It could be a tough week for Currys as demand for electronics continues to unwind after booming during the pandemic. Like-for-like sales are forecast to slide 6% in the first half to the end of October and revenue is expected to decline 7.6% to £4.42 billion. Weaker demand twinned with rising costs puts profits at risk. Analysts believe it will eke out an adjusted pretax profit of just £1.6 million compared to the £48 million booked a year earlier. Its determination to offset rising costs with savings could prove key to the ultimate profit outcome this week and whether it stays out of the red. Currys has warned it is being prudent and, with things seemingly getting tougher since it issued its initial guidance back in July, investors will be keeping an eye on its guidance for the rest of the year. Currys is currently aiming to deliver an adjusted pretax profit of £130 million to £150 million over the full year, down from the £186 million booked in the last financial year.

RWS Holdings

RWS Holdings has already revealed that annual revenue rose around 8% as expected, with analysts looking for a figure of £753 million. That was boosted by the contribution from SDL that it acquired a year ago, in addition to higher demand for language services and other products. Adjusted pretax profit is forecast to rise 15.4% to £134.3 million thanks to much better margins and RWS has also reassured investors by outlining it continued to generate cash and boost its cash balance. The dividend will continue to grow under its progressive policy and RWS has said it is on course to deliver a performance in the new financial year in-line with the goals outlined during its latest capital markets day.

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