Earnings playbook: A complete guide for investors to the big reports ahead this week

Published Sun, Oct 17 20218:12 AM EDT

Sara Salinas @in/saracsalinas @saracsalinas

Earnings season picks up this week, with some big names in tech and travel set to release results. Wall Street darlings Netflix and Tesla are both teed up to report, as well as legacy tech companies Intel and IBM. Investors will be looking to United, American and Southwest for updates on airline volumes and labor shortages. The carriers — along with Chipotle and Procter & Gamble — are also likely to offer clues into supply chain challenges and rising costs that could hit consumers in the coming quarters. Tuesday Johnson & Johnson is set to report earnings around 6:45 a.m. ET and will hold an analyst call at 8:30 a.m. Last quarter: JNJ beat Wall Street estimates on the top and bottom lines , boosted in part by the company's pharmaceutical business, which developed its single-shot Covid vaccine This quarter: Wall Street expects earnings to come in about 7% higher than the year-ago period What CNBC is watching: Johnson & Johnson will report under a shadow of criticism about how it handled the opioid crisis and development of a comparatively less-effective Covid vaccine under outgoing CEO Alex Gorsky. Still, revenues across the company's core segments have rebounded to pre-Covid levels, and its pharmaceutical segment saw a nice bump from the one-shot vaccine. Immediate risks going forward are supply chain snags and rising costs. What history shows: J & J has a great track record on EPS reports, beating estimates 95% of the time with particular success during the third quarter, according to Bespoke Investment group. The stock has gained ground on 3 of the last 4 reports. Procter & Gamble is set to report earnings for the fiscal first quarter of 2022 just before 7 a.m. ET, with an investor call scheduled for 8:30 a.m. Last quarter: PG topped EPS projections , but warned cost pressure would weigh on future profits This quarter: Analysts are forecasting earnings slightly below the same period a year ago What CNBC restaurants reporter Amelia Lucas is watching: " This is the first quarter when Procter & Gamble will start to see the impact of price hikes on products like Pampers diapers. The company is forecasting that the higher commodity and freight costs that led to the price hikes will hit its fiscal 2022 earnings by roughly $1.9 billion, so investors will be watching to see if its outlook on inflation has changed. It's also the last quarter with CEO David Taylor at the helm before Chief Operating Officer Jon Moeller succeeds him." What history shows: P & G has beaten EPS estimates and gained in share price 5 of the last six quarters, according to Bespoke. Netflix will report earnings at 4 p.m. ET, and will release its traditional pre-taped analyst interview at 6 p.m. Last quarter: NFLX beat on paid subscriber growth , but fell short of EPS expectations This quarter: The Street is expecting a nearly 50% EPS bump over last year What CNBC media reporter Alex Sherman is watching: " This quarter is all about the 'Squid Game' effect . Netflix has told investors to be patient after a slow first six months, saying its content in the second half of the year would be stronger after pandemic shutdowns delayed new series production. But no one could have anticipated just how popular the Korean dystopian series would be . Now, the question is just how many new subscribers did Netflix add because of its popularity?" What history shows: The stock has a tough time living up to investors' expectations. Netflix stock has traded lower the session after earnings nine out of the last 12 quarters, according to Bespoke. Q4 is typically the company's biggest winner, and Q3 the stock's most volatile. United Airlines will report results after market close, but won't hold the company's investor call until 10:30 a.m. the following day Last quarter: UAL narrowed its quarterly loss and detailed plans to ramp up flying This quarter: Analysts are expecting to see United continue to narrow its per-share quarterly losses this quarter and next What CNBC airlines reporter Leslie Josephs is watching: "How will a surge in fuel prices impact United's ability to turn a profit? Rival Delta warned last week that it will swing back to a loss in the fourth quarter because of rising fuel costs. The good news is travelers are returning and international travel restrictions are coming to a close . That's great for United, which still operates a big international network. Another watcher: The status of United's grounded fleet of two-dozen Pratt & Whitney-powered Boeing 777-200s, which have been out of service since February after engine failure near Denver." What history shows: The third quarter is United's roughest for estimate comparisons, topping EPS and revenue projections just 36% of the time. The stock has traded lower after 6 of the last 8 reports, according to Bespoke. Wednesday IBM is slated to release its earnings report just after 4 p.m. ET, with an investor call scheduled for 5 p.m. Last quarter: IBM posted its strongest revenue growth in three years and beat on the top and bottom lines This quarter: Wall Street is forecasting EPS just slightly under last year What CNBC technology editor Ari Levy is watching: " The big news for IBM is the coming spinoff of its managed infrastructure business into a new company called Kyndryl. But the problem for IBM persists: Where is the growth? While tech giants Microsoft, Amazon and Google continue driving adoption of their cloud services, IBM is on the outside looking in and mired in low-single-digit expansion. The remaining glass half-full investors are excited about Red Hat, which IBM bought for $34 billion in 2019, because it's a real thriving software business. Whether IBM can effectively integrate it remains to be seen." What history shows: IBM hasn't missed on EPS projections in seven years, but revenue comparisons are more of a mixed bag. The stock falls in next-day trading more often than it gains, though, according to Bespoke. Tesla should report quarterly results sometime between market close and 5 p.m. ET, and will hold a call with analysts at 5:30 p.m. Last quarter: TSLA posted record net income and revealed revenue up 74% This quarter: Analysts expect EPS to double for Tesla this quarter What CNBC Tesla reporter Lora Kolodny is watching: "Last quarter, CEO Elon Musk said he wouldn't lead these quarterly updates moving forward, so he may choose not to speak at all on Wednesday. Investors will want details on the now-delayed Cybertruck, Tesla's progress on driverless technology after clashes with federal regulators , and whether a $25,000 electric car CEO Elon Musk teased last year is still underway. Supply chain issues, which have weighed on all automakers, will also be in focus, along with the company's custom 4680 battery cells and its cryptocurrency strategy ." What history shows: The third quarter is typically strong for Tesla: the company beats on EPS 80% of the time and the stock gains an average of nearly 6% following Q3 reports, according to Bespoke. Thursday Southwest Airlines is set to report results at 6:30 a.m., with an investor call scheduled for 12:30 p.m. Last quarter: LUV struggled with cancellations and operations snags and warned higher fuel prices would drive up costs for the third quarter This quarter: Wall Street is forecasting another quarter of per-share losses before a projected break-even fourth quarter What CNBC airlines reporter Leslie Josephs is watching: "How much did Southwest's meltdown earlier this month cost the airline? The airline cancelled more than 2,200 flights , blaming a combination of staffing shortages, bad weather and air traffic control constraints. It's scrambling to add staff but the chaos raises questions about how it schedules crews and flights, leaving little margin for error. Also a big question: How is the airline progressing in its compliance with a federal Covid-19 vaccine mandate for staff." What history shows: The past two quarters have seen Southwest shares sell off after earnings, snapping a pretty consistent streak of next-session gains, according to Bespoke. American Airlines will report results at 7 a.m. ET, followed by an analyst call at 8:30 a.m. Last quarter: AAL snapped five consecutive quarters of losses , thanks in part to federal support This quarter: The Street is looking for a narrower per-share loss than last quarter What CNBC airlines reporter Leslie Josephs is watching: "Investors will be watching how higher fuel prices and other costs associated with higher travel demand will weigh on American's bottom line toward the end of the year. Staffing levels are also key as American races to hire to cater to stronger travel demand. Shortages of staff contributed to disruptions during the summer, something the carrier doesn't want to repeat during the peak holiday travel season. Executives will be pressed on how many employees are vaccinated so far as the company scrambles to comply with a federal mandate that takes effect Dec. 8. " What history shows: American has the best track record against EPS comparisons of any of the airlines reporting this week, beating analyst estimates 87% of the time, according to Bespoke. Still, the stock trades essentially flat the day after an earnings report on average. Intel is slated to report earnings right at market close, with an investor call set for 5 p.m. ET Last quarter: INTC beat estimates for EPS and revenue but guided toward lower margins for Q3 This quarter: Analysts forecast EPS exactly in line with the year-ago quarter What CNBC technology reporter Kif Leswing is watching: " Intel is in a period of big capital expenditure, as it builds new factories to manufacture its own chips and provide the capacity for its burgeoning foundry business. Lower margins may be fine with investors if Intel continues to beat expectations for earnings and sales driven by huge demand for PCs. Last quarter, Intel said PC sales were up 33%, but that trend may be changing as pandemic-driven PC sales for working and going to school from home start to slow down." What history shows: Intel stock typically gets hit hard the day after an earnings report. Shares have slid in next-day trading 8 of the last 12 quarters, according to Bespoke. Seven of those 8 declines were of more than 5%. Snap will release results at 4:10 p.m. ET, followed by an analyst call at 5 p.m. Last quarter: SNAP topped Wall Street projections across the board , sending the stock up double-digits This quarter: Wall Street is expecting a big improvement over the 1 cent EPS that Snap posted for Q3 2020 What CNBC technology reporter Salvador Rodriguez is watching: "Investors will want to see Snap continue the good vibes from its blow-out quarter in July, when user growth and revenue far exceeded expectations. But investors will also be eager to see how Snap continues to navigate Apple's iOS 14.5 privacy changes and their impacts on the company's advertising business." What history shows: Snap is easily the most volatile stock heading into this week's earnings. Shares have put up double-digit next-day gains 5 of the last 12 quarters. Chipotle Mexican Grill will release results at 4:10 p.m. ET and will hold an investor call at 4:30 p.m. Last quarter: CMG saw sales jump as dine-in customers returned to restaurants This quarter: The Street is projecting earnings nearly 70% higher year-over-year What CNBC restaurants reporter Amelia Lucas is watching: "Chipotle's sales are back to pre-pandemic levels, but the burrito chain faces the same challenges as the rest of the restaurant industry. Investors will be focused on food costs, labor shortages and the impact of the delta variant on Chipotle customers' behavior." What history shows: The third quarter is Chipotle stock's weakest following an earnings report. Shares slide an average of 1% in next-day trading, according to Bespoke, in contrast to average next-day gains every other quarter.

A trader works on the trading floor at the New York Stock Exchange (NYSE) in Manhattan, New York City, U.S., August 11, 2021.

Andrew Kelly | Reuters