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Earnings season picks up this week with investors frantically searching for companies that are poised to beat. After a strong session from the banks capped off last week, earnings prospects appear to be picking up. The earnings recovery that was once believed to be delayed by the shocking Brexit vote could come into full effect as early as this week.
Beaten-down companies of 2015 are showing signs of reversing their past misfortunes as we head into the heart of earnings season. These rags-to-riches stories come from some of the most unsuspecting companies, including General Motors, AMD, Pandora, and General Electric. Their earnings will come in the shadows of reports from tech giants such as Microsoft and Intel, but they could very well be the true stars this week.
General Motors kicks things off with its second quarter report Thursday before the opening bell. The carmaker is an American icon but that hasn't done much in term of earnings or growth. Prior to last quarter, revenue growth had floundered in the range of flat to negative single-digit losses.
The historic rebound in car sales has helped General Motors regain its share in the Unite States and internationally. Tepid oil prices have helped move high-margin, gas-guzzling SUVs, trucks and luxury vehicles in the past year. More importantly, GM's continued success is allowing it to invest in advanced technology and innovations to compete with Tesla and Uber. Earlier this year the company invested $500 million into Lyft with the hope of launching a self-driving car service in the near future.
Analysts are calling for earnings per share of $1.51 on $39.11 billion in revenue, according to the Estimize consensus data. Compared to a year earlier this predicts as a 19 percent increase on the bottom line and 2 percent on the top.
Next up are AMD and Pandora. Both companies are scheduled to report second quarter earnings Thursday after the closing bell.
AMD has been on the wrong side of earnings for two years, posting negative top and bottom line growth for eight consecutive quarters. The company has played second fiddle to Nvidia and Intel in both graphics processing unit (GPU) and central processing unit (CPU) offerings, but that seems to be changing. AMD has scored several small victories recently that have closed the gap with its two biggest rivals.
After announcing its Polaris GPU in May and selling it in June, the stock has more than doubled. Shares are now up nearly 90 percent since the start of the year and typically rise during earnings season.
Additionally, AMD has made headway on its Zen processor. If the market reacts well to Zen, AMD will finally pose a threat to Intel in the high end CPU space. They have also taken steps to immerse themselves in virtual and augmented reality which bodes well for future quarterly earnings.
Analysts are looking for a loss of 9 cents per share on $955.34 million in revenue, according to the crowdsourced consensus data. Compared to the same period last year this represents a 51-percent increase on the bottom line and 2 percent on the top line, marking the first quarter of positive comparisons in two years.
Pandora, on the other hand, has already proved that its strategic initiatives are moving the company in the right direction. The first quarter featured gains across many key metrics, from ad revenue to listening hours. Pandora has been overhauling its operations to provide an all-inclusive listening experience on its own platform. It recently announced a new platform that will feature radio, on-demand play, and live music that is expected to add $750 million to its top line.
Its ongoing success has allowed Pandora to invest in acquisitions and new technologies. Pandora has made strides by integrating its app within the rapidly growing sharing economy. The Uber app now includes core radio services for active drivers around the world. There is no denying that Pandora is one of the premier music providers, but given Spotify recently eclipsed 100 million active users and Apple and Amazon have only recently busted onto the scene, it might not be smooth sailing for Pandora.
For the second quarter, analysts are looking for a 14-cent loss per share on $352.64 million in revenue. This reflects a 23-percent increase in revenue from a year earlier. Shares are now up 50 percent in the past three months as investors gain more confidence in Pandora's long-term trajectory.
Capping off the week is General Electric. The global conglomerate is scheduled to report its second-quarter earnings Friday, before the opening bell. First quarter earnings were weaker than expected due to weak oil price and sales, but the company expects to meets its full-year target.
Things have been looking up for GE since they announced the majority sale of GE capital in April. General Electric has successfully sold $180 billion of the $200 billion in assets it was prepared to sell by year's end. Freeing up an enormous amount of cash has allowed the company to shift some of its resources to its digital business. General Electric's pivot to a more digital focus should transform it into one of the largest digital industrial companies in the world. By 2020, GE expects to be one of the top 10 software companies in the world.
Analysts are expecting General Electric to post positive comparisons for Q2, something that it hasn't achieved in any of the past six quarters. The crowdsourced consensus is looking for earnings per share of 46 cents on $30.84 billion in revenue, reflecting a 62-percent increase on the bottom line and 13 percent on the top. Earnings per share estimates have been revised up nearly 40 percent since its last report as investors are confident that GE can beat expectations.
How do you think these names will report this week? Be included in the Estimize consensus by contributing your estimates here!
Correction: This article has been updated to reflect that General Motors reports earnings Thursday.