Earnings playbook: How to play the second half of the season with Starbucks and Caterpillar on deck

Published Sun, Jul 31 20228:54 AM EDTUpdated Mon, Aug 1 20228:22 AM EDT

We're already past the halfway mark of the earnings season, but that doesn't mean the deluge will ease this week. Nearly 150 S & P 500 companies are slated to report, including Starbucks, Uber Technologies and Caterpillar. Companies such as Starbucks and Uber should give investors insight into the global consumer's health, while Caterpillar will give clues on how the world economy is faring in this world of rising rates. So far, the corporate earnings season has been a mixed bag, with companies such as Amazon and Apple easily beating expectations, while others such as Intel widely missed estimates. Through Friday, more than 55% of the S & P 500 had reported earnings. Of those companies, 72% beat analyst earnings forecasts, FactSet data shows. Take a look at CNBC Pro's breakdown of what's expected from next week's biggest reports. Tuesday Caterpillar is set to report earnings before the bell, followed by a conference all with management at 8:30 a.m. ET. Last quarter: CAT posted earnings and revenue that beat expectations. However, the industrial giant warned it that excavator demand in China could fall below pre-pandemic levels in 2022. This quarter: Analysts expect Caterpillar to report double-digit earnings and revenue growth from the year-earlier period, according to Refinitiv. What CNBC is watching: "With recession signals mounting, investors will look for clues in Caterpillar's report that could indicate whether global growth continues to slow down, or if there are signs that a turnaround may be starting. JPMorgan analyst Tami Zakaria noted recently that the firm expects Caterpillar to 'speak positively to demand and order trend in most markets ex-China, which remains fluid.'" What history shows: Caterpillar has reported a better-than-expected profit in each of the last eight earnings days, FactSet data shows. However, Bespoke data shows the stock averages a loss of 0.49% after Caterpillar reports earnings. JetBlue is set to report earnings before the open. Management is slated to hold a call at 10 a.m. ET. Last quarter: JBLU posted a smaller-than-expected loss, but the airline drastically cut its 2022 growth plans , sending the stock down. This quarter: Analysts polled by Refinitiv expect revenue to have jumped on a year-over-year basis, while losses are seen to have narrowed. What CNBC airlines reporter Leslie Josephs is watching: "JetBlue executives are fresh from their victory in beating out Frontier for discounter Spirit , and investors have plenty of questions. Among them: How will JetBlue get a takeover of an airline whose name is synonymous with budget travel past the Biden Justice Department, just as the administration is trying to calm worries about high inflation? The DOJ has already vowed a strong line against any deals that could harm competition and is suing JetBlue and American to block their regional partnership. Additionally, will it hamstring JetBlue operationally or financially JetBlue to convert Spirit's sparse interiors with its own, which feature seatback screens and more legroom. Management will also have to outline how they will digest merger costs while expenses are on the rise, and how willing customers are to continue to pay high fares as the peak summer travel season wanes." What history shows: JetBlue's last seven earnings reports have outperformed analyst expectations, according to FactSet. However, JetBlue shares dropped more than 11% after the company's first-quarter numbers were released. Uber Technologies is set to report before the open, followed by a conference call at 8 a.m. ET. Last quarter: UBER posted a surge in revenue for the first quarter . However, the ridesharing company also reported a massive loss due to equity investments in Grab, Aurora and Didi. This quarter: The company's revenue is expected to have growth by nearly 90% year over year. Uber is, however, expected to report a loss on the bottom line, Refinitiv data shows. What CNBC is watching: "As the global economy continues to recover from Covid-related shutdowns that took place in recent years, investors will look for sign of further improvement in Uber's ridesharing business. Cowen's John Blackledge, who has an outperform rating on the stock, sees gross bookings growing by 31.6% from the year-earlier period." What history shows: Bespoke data shows Uber typically struggles on earnings days, averaging a decline of 1.08%. Starbucks is set to report earnings after the closing bell. Management is expect to hold a call at 5 p.m. ET. Last quarter: SBUX suspended its outlook as Covid lockdowns in China hurt sales . This quarter: The coffee chain's earnings are expected to have fallen sharply from the year-earlier period, according to Refinitiv. What CNBC is watching: "There are several questions facing Starbucks ahead of its latest quarterly report, including how is its international business doing? The company said in May it would exit Russia after 15 years in the country, closing all 130 licensed cafes. Investors will also look for updates on the company's search for a new CEO . In June, interim Chief Executive Howard Schultz said Starbucks was looking externally for its next CEO." What history shows: Starbucks shares averages a gain of 0.56% on earnings days, Bespoke data shows. However, the company only beats earnings expectations 53% of the time. AMD is set to report earnings after the close, and company leadership will hold a call at 5 p.m. ET Last quarter: The chipmaker reported a 71% surge in sales, shrugging off worries over a PC slowdown . This quarter: Wall Street analysts expect sharp year-over-year earnings and revenue growth for AMD, Refinitiv data shows. What CNBC tech reporter Kif Leswing is watching: "AMD is facing two opposing headwinds. First, the PC and server markets which it sells processors to appear to be slowing down after two boom years, according to electronics companies, analysts and earnings reports. That could cap AMD's upside if its primary markets are slowing down. Its main rival, Intel, is stumbling substantially, lowering forecasts for sales and profits. This gives AMD, which has surpassed Intel in performance, a chance to grab market share." What history shows: AMD has been on an earnings tear recently, with FactSet data showing the company has beaten analyst estimates in eight of the past nine earnings days. Airbnb is set to report earnings after the bell, with a conference call scheduled for 4:30 p.m. ET. Last quarter : ABNB posted better-than-expected results, as revenue surged by 70%. This quarter : Analysts expect Airbnb's revenue to nearly double on a year-over-year basis, according to StreetAccount. What CNBC is watching : "Investors will be looking for more signs of a recovery in travel demand. Analysts at Citi, who rate Airbnb as a buy, said in a July 14 note that they expect the company's results to be in line or better than consensus estimates, citing 'continued strengthening of the leisure travel market in most geographic areas and Airbnb's leadership position in Alternative Accommodations that we believe is taking share from more traditional lodging options.'" What history shows : FactSet data shows Airbnb has beaten analyst expectations in the last four quarters. The stock also averages a 7.1% gain on earnings days, according to Bespoke. Wednesday CVS is set to report earnings before the opening bell, followed by a conference call at 8 a.m. ET. Last quarter: The pharmacy operator raised its full-year forecast , as the company's first-quarter earnings beat expectations. This quarter: CVS is expected to report single-digit revenue growth, but earnings are expected to fall about 10%, according to Refinitiv. What CNBC retail reporter Melissa Repko is watching: "As foot traffic for Covid tests and vaccines dissipates, CVS has added a broader array of health-care services to its stores. Investors will listen for updates on that strategy and whether the company has gotten closer to striking a deal with a primary-care provider. That is an especially hot topic after Amazon, a newer player in the health-care space, said last week that it was buying primary-care company One Medical. Retail sales, though a smaller part of its business, may also offer clues about how consumers are responding to inflation." What history shows: Bespoke data shows CVS beats earnings estimates 77% of the time, with the stock averaging a gain of 0.48% on earnings days. Under Armour is set to report earnings in the premarket, with management set to hold a call at 8:30 a.m. ET. Last quarter: UAA offered weak guidance and posted an unexpected loss for the quarter . This quarter: As of Friday, analysts polled by Refinitiv expected the apparel maker to post earnings of 4 cents per share on revenue of $1.351 billion. What CNBC is watching: "Investors will be looking for Under Armour to rebound after the first quarter's disastrous print. However, some analysts think the outlooks for the apparel maker still looks murky. Earlier this month, Jefferies downgraded Under Armour to neutral from buy, noting that the company's fundamentals are " lagging ." What history shows: Under Armour has beaten profit expectations in three of the last four earnings days, according to FactSet. Yum Brands is set to report earnings before the open. Management is expected to hold a news conference at 8:15 a.m. ET. Last quarter: YUM reported weaker-than-expected earnings as lockdowns in China weighed on KFC and Pizza Hut sales . This quarter: Refinitiv data shows analyst expect a small increase in year-over-year revenue along with a decline in earnings per share. What CNBC is watching: "Yum Brands investors will be looking for signs of improvement in the company's international sales, especially China." What history shows: Yum Brands outperforms earnings expectations 84% of the time, Bespoke data shows. The stock averages a gain of 0.36% on earnings days. Robinhood is set to report earnings after the bell, with corporate leadership slated to hold a call at 5 p.m. ET. Last quarter: HOOD reported a revenue decline as well as fewer active users on its platform . This quarter: Robinhood's revenue is expected to have fallen by more than 40% on a year-over-year basis, Refinitiv data shows. What CNBC investing reporter Jesse Pound is watching: "Robinhood's growth has been heading in the wrong direction in recent quarters, in both active users and revenue. It seems unlikely that the company would have made a major reversal in those areas during a rough second quarter for markets, but stabilization could be seen as a positive. Investors will be looking for updates on the growth of Robinhood's crypto wallets business and how management is approaching potential regulation around payment-for-order-flow." What history shows: Robinhood earnings have come in below expectations in each of the past four quarters, FactSet data shows. Thursday Eli Lilly is set to report earnings before the bell, followed by a call at 9 a.m. ET. Last quarter: LLY posted a first-quarter profit that beat analyst expectations. This quarter: Eli Lilly's profits are expected to have fallen by roughly 10% from the year-earlier period, with revenue remaining largely flat, according to Refinitiv. What CNBC is watching: "Investors will be looking for clues on how the company's tirzepatide drug — which was approved earlier this year as treatment against Type 2 diabetes — could help Eli Lilly's top line grow, especially as trial data points to effectiveness in helping patients lose weight." What history shows: Bespoke data shows that Eli Lilly shares typically struggle on earnings days, averaging a decline of 0.45%. Paramount is set to report earnings in the premarket, followed by a call with management at 8:30 a.m. ET. Last quarter: PARA reported strong gains in streaming subscribers, but posted a weaker-than-expected revenue . This quarter: Analysts expect a sharp decline in Paramount's year-over-year earnings, according to Refinitiv. What CNBC media reporter Alex Sherman is watching: "For the past several years, the big story among media and entertainment companies has been streaming subscriber growth. But there's a new headline story for the moment, and that's advertising. Roku said Thursday there's been a significant pullback in the scatter market as companies grapple with a potential recession. Paramount's cable network business and main streaming services (Paramount+ and Pluto) both count on advertising revenue. Investors will be looking for guidance on how much of a decline in ad revenue executives expect in the third quarter." What history shows: FactSet data shows Paramount has missed earnings expectations in two of the past four quarters. Block is set to report earnings after the close, with management set to hold a call at 5 p.m. ET. Last quarter: SQ reported operating earnings that exceeded analyst expectations. This quarter: Refinitiv data shows Block earnings are expected to have taken a massive year-over-year hit. What CNBC is watching: "Investors will be looking for clues on how the payments company's big bet on crypto continues to impact Block, especially given bitcoin's massive losses this year. The digital currency has lost nearly half of its value in 2022." What history shows: The company formerly known as Square beats earnings expectations 77% of the time, according to Bespoke. — CNBC's Michael Bloom contributed to this report.