Quarterly earnings reports are a good periodical indicator of a company’s financial strength. Their business performance throughout the last completed quarter gets reflected in a company’s financial statements for the quarter.
While financials are an important aspect of a business that investors consider before making investment decisions, many companies provide guidance about their future earnings potential as well. This is another important factor investors should consider as well. As a result, quarterly reports can drive a company’s stock price. Quite naturally, better-than-expected quarterly numbers and improved forecasts usually translate into price gains for the stock.
In October, several major companies are scheduled to announce their results for the quarter. These quarterly results are especially important this year as they are expected to shed light on how companies adjusted their business models to operate in the “new-normal.” This is something that could determine the performance of their stocks in the final months of the year.
Major companies such as Johnson & Johnson, Inc. (JNJ), UnitedHealth Group, Inc. (UNH), Wells Fargo & Company (WFC), and Delta Air Lines, Inc. (DAL) are scheduled to announce their earnings this week. These reports will help investors make key decisions regarding their portfolios and shape their outlook on the respective industries as a whole.
Johnson & Johnson, Inc. (JNJ)
JNJ develops, manufactures, and markets a variety of products for healthcare. The company primarily operates in the consumer, pharmaceutical, and medical devices segment. JNJ’s brands include Listerine, Splenda, Pepcid, Neutrogena, and more. JNJ’s stock has gained 3.5% so far this year.
JNJ is scheduled to report its third quarter earnings results on October 13th. The company’s revenue is estimated to decline 2.9% to $20.1 billion in the third quarter and increase 3.5% in the following quarter. The company’s EPS is expected to decline 7.5% to $1.96 in the third quarter and increase 3.2% next quarter.
JNJ’s revenue is expected to decline due to the continued spread of the coronavirus and the resultant lower consumer spending. This has especially affected the company’s skin, health, and beauty care products. The sale of medical devices is also expected to have been negatively affected due to deferral of medical procedures caused by the pandemic.
However, JNJ has several drugs in the pipeline which could lead to the future growth of the company. The company has received regulatory approval for Zabdeno, a preventive Ebola vaccine, and Tremfya, for the treatment of Active Psoriatic Arthritis. The company also has a coronavirus vaccine candidate which is undergoing trials.
How does JNJ stack up for the POWR Ratings?
A for Trade Grade
A for Buy & Hold Grade
A for Peer Grade
B for Industry Grade
A for Overall POWR Rating
The stock is also ranked #10 out of 239 stocks in the Medical – Pharmaceuticals industry.
UnitedHealth Group, Inc. (UNH)
UNH operates as a well-being and health company. The company operates two online platforms which are Optum and UnitedHealthcare, through which it provides healthcare products and insurance in various markets. UNH’s stock has gained 11.5% so far this year.
UNH scheduled to report its third quarter earnings results on October 14th. UNH’s revenue is estimated to see growth of 5.9% in the third quarter to reach $63.9 billion and 7.2% in the fourth quarter. The company’s EPS is expected to decline 20.4% to $3.09 in the third quarter and 9.7% this year.
The company has recently announced its 2021 Medicare Advantage and prescription drug insurance plans. This plan aims to bring more affordable coverage and greater plan access to consumers. The company has also launched Level2, which is a new therapy for patients suffering from Type-2 Diabetes. It will help patients monitor their health digitally and get one-on-one coaching with regard to their condition.
It’s no surprise that UNH is rated a “Strong Buy” in our POWR Ratings system, with a grade of “A” in Trade Grade and Buy & Hold Grade. In the 9-stock Medical – Health Insurance industry, it is ranked #1.
Wells Fargo & Company (WFC)
WFC provides banking services worldwide. WFC offers retail, commercial, and investment banking services. The company operates in community banking, wholesale banking, wealth, brokerage and retirement segments. WFC’s stock price has fallen 52.9% so far this year.
WFC will be reporting its third quarter results on October 14th. The company’s revenue is expected to decline 18.4% to $17.9 billion in the third quarter and 10.9% in the fourth quarter. The company’s EPS is expected to decline 52.2% to $0.44 in the third quarter and 96.8% this year.
WFC’s business is being adversely affected by the low-interest rate environment which is causing lower revenues from interest. Further, the company is expected to witness lower operating losses due to customer remediation accruals. The company has also been experiencing higher personnel expenses due to the spread of the coronavirus.
WFC has launched a new Payment Tracker which is a web-based solution to track global payments. This move will help improve transparency in the financial system and reduce service costs. The company is currently pursuing economies in staffing and has reduced 700 jobs in its commercial banking operations. It is expected that there will be more cuts in the future.
Delta Air Lines, Inc. (DAL)
DAL is a global airline company for both passengers and cargo. It is one of the largest airline companies in the world. DAL’s stock price has fallen 43.9% so far this year.
DAL will be announcing its third quarter earnings results on October 13, 2020. The company’s revenue is expected to decline 75.3% to $3.1 billion in the third quarter and 62.3% in the fourth quarter. The company’s EPS is expected to decline 231.9% to -$3.06 in the third quarter and 233.2% this year.
The company has been severely affected by the spread of the coronavirus and the resultant lockdowns and travel restrictions. The company is making a private offering of senior secured notes and a senior secured term loan in a bid to raise $6.5 billion to help survive the pandemic. Approximately 17,000 employees of the airline have accepted early retirement packages or buyouts over the last few months.
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JNJ shares were trading at $152.16 per share on Monday afternoon, up $1.19 (+0.79%). Year-to-date, JNJ has gained 6.41%, versus a 11.38% rise in the benchmark S&P 500 index during the same period.
About the Author: Aaryaman Aashind
Aaryaman is an accomplished journalist that’s passionate about providing in-depth insights about investing and personal finance. Recently he has been focused on the stock market and he specializes in evaluating high-growth stocks. More...
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