The earnings season is reaching its conclusion, with just a handful of major corporations scheduled to unveil their financial results. Among the S&P 500 companies that have yet to report for the third quarter, giants like Home Depot and Disney are capturing significant attention from investors. These results may provide critical insights into whether the recent stock market recovery can sustain its momentum, particularly in the wake of the recent election. To date, over 450 S&P 500 companies have publicized their earnings, revealing a substantial 74% have outperformed analyst expectations, as noted by FactSet.
Upcoming Reports: What to Expect
As the reporting deadline looms, investors are focusing closely on the results from several key players. Home Depot is set to announce its earnings prior to market opening, followed by a management call at 9 a.m. In its last quarter’s report, the home improvement retailer indicated a caution among consumers, hinting at a potential slump in sales. Analysts from LSEG predict a slight year-on-year decline in earnings for Home Depot, which would raise questions about its resilience in a shifting consumer landscape.
Analysts at UBS have voiced concerns over Home Depot’s same-store sales, suggesting that weakened demand might permeate the upcoming quarter. “We believe ongoing pressure on larger projects may lead professionals to pivot toward smaller projects,” explained analyst Michael Lasser. Nevertheless, the report highlights that innovation may still encourage some consumers to upgrade their purchases in specific categories, providing some financial support.
Live Nation: Riding the Wave of Consumer Demand
Another key player set to announce results is Live Nation Entertainment, expected to report before the market opens with a follow-up call at 9 a.m. Last quarter, Live Nation exceeded expectations for operating income, while its revenue aligned with forecasts. However, this quarter, market indicators suggest a projected earnings decline of approximately 10% compared to the same period last year.
Despite these predictions, Morgan Stanley recently raised its price target for Live Nation, suggesting confident momentum. The bank asserts that Live Nation remains a solid investment given the robust consumer enthusiasm for live events and performances. They attribute the 2024 stock success, which has seen a 31% increase, to the ongoing demand for entertainment experiences, despite a temporary slowdown in stadium activity.
On Thursday, Walt Disney is anticipated to report earnings ahead of market opening, with its earnings call scheduled for 8:30 a.m. In its previous quarter’s report, Disney not only surpassed earnings forecasts but also achieved profitability within its streaming services. With projections indicating more than 30% growth year-on-year, investors are eagerly awaiting the insights Disney will present.
Crucial to investors will be Disney’s forward guidance, particularly given the firm’s recent difficulties following its last two earnings releases, which resulted in share price drops of 4.5% and 9.5%. Analyst Michael Morris from Guggenheim anticipates that Disney’s forecasts could outperform consensus, particularly in revenue and operating income attributed to content creation, direct-to-consumer ventures, and the company’s experiential offerings.
Earnings announcements will also include Applied Materials, which is scheduled to report after the market’s closing bell, with management’s call planned for 4:30 p.m. The previous quarter saw Applied Materials posting results that were better than expected, but indicators show that expectations for this quarter remain muted. Analysts are forecasting modest year-on-year growth in both earnings and revenue, which could reaffirm uncertainties regarding performance within the semiconductor industry.
Despite the broader sector showing impressive returns, Applied Materials has lagged behind, up only 18% compared to the VanEck Semiconductor ETF’s 48% surge in the same timeframe. Historical data suggests that shares of Applied Materials tend to see an average gain of 0.8% on earnings days, hinting at cautious optimism.
The winding down of the earnings season offers a glimpse into the health and trajectory of major corporations across various sectors. As Home Depot, Live Nation, Disney, and Applied Materials prepare to disclose their financial performances, investors must remain vigilant, utilizing these insights to gauge market conditions and make informed decisions. The outcomes could very well shape market dynamics and influence investment strategies moving forward.