Earnings playbook: Alphabet and General Motors lead off a busy week of reports

Published Sun, Jul 23 20236:31 AM EDT

This week could be make or break for earnings season. Roughly 150 S & P 500 companies are slated to report, including General Motors, Microsoft and Alphabet. Those results will come as the broader U.S. stock market continues its march higher; the S & P 500 is up 18% year to date through Friday's close. Thus far, 75% of the names that have reported have exceeded analyst expectations, FactSet data shows. However, that beat rate is below a three-year average of 80%, according to The Earnings Scout. Take a look at some of the key companies scheduled to post their latest numbers, and what to expect from them. Tuesday General Motors is set to report earnings before the bell, followed by a call at 8:30 a.m. ET. Last quarter: GM posted an earnings beat and raised its 2023 guidance . This quarter: Analysts polled by Refinitiv expect earnings increased by more than 60% in the second quarter. What CNBC autos reporter Michael Wayland is watching: "Wall Street analysts are expecting solid second quarter results Tuesday from General Motors, as U.S. new vehicle sales continue to rebound and the pricing mix on cars and trucks remains high. Aside from the financial results, investors will be eager to hear any updates regarding launch plans for GM's EVs for the remainder of the year, including all-electric versions of the company's Chevrolet Blazer and Equinox crossovers and Silverado pickup truck. The company also may give additional insights regarding what are expected to be contentious contract negotiations with the United Auto Workers union, which formally kicked off earlier this month." What history shows: GM earnings beat earnings expectations 86% of the time, according to Bespoke. However, the stock only averages a 0.17% gain on earnings day. Alphabet is set to report earnings after the bell, with management slated to hold a call at 5 p.m. ET. Last quarter: GOOGL reported earnings and revenue that beat expectations . This quarter: Earnings for the tech giant are expected to have grown by 10% from the year-earlier period, per Refinitiv. What CNBC tech reporter Jennifer Elias is watching: " For the second quarter of 2023, investors are expecting to hear more specifics of Google's plans around AI and how they'll impact the company's core business. They expect to receive a time frame for when the company plans to finally launch its Search Generative Experience product, which it has said will include AI-powered options to use its search engine but has not yet been released to the broader public. Investors are also expecting to see the company's margins to benefit from cost savings and layoffs. While they still expect continued muted growth, they're hoping to see higher ad spend boost Q2 revenue and expects the company to show easier year-over-year comparisons compared to previous quarters." What history shows: Bespoke data shows Alphabet earnings beat expectations 68% of the time, and the stock rises more than 1% on earnings day. That said, shares have fallen after the last two earnings reports. Microsoft is set to report earnings after the close, followed by a call at 5:30 p.m. ET. Last quarter: MSFT beat earnings estimates and said AI will drive top-line growth . This quarter: Analysts polled by Refinitiv expect single-digit revenue growth and mid double-digit earnings expansion. What CNBC is watching: Microsoft shares hit a record high last week, as excitement around artificial intelligence continues to fuel the tech giant's rally this year. That said, investors on Tuesday will also keep an eye on revenue growth for it cloud service Azure, which slowed down in the fiscal third quarter. Goldman Sachs analyst Kash Rangan also said capital expenditures will be on Wall Street's radar, as the tech giant continues to invest in AI. "Although investors are concerned that capex intensity may reach $45bn+ next year, we see ~$30-35bn being more likely. We expect $2-5bn to be dedicated to supporting Gen-AI services. Nevertheless, investors may overlook these investments given the outsized revenue potential," Rangan said. What history shows: Since 2016, Microsoft's quarterly earnings have missed expectations just twice, FactSet data shows. Wednesday Coca-Cola is set to report earnings before the market open. Management is expected to hold a call at 8:30 a.m. ET. Last quarter: KO earnings topped analysts' forecasts, driven by higher prices and strong demand. This quarter: Earnings and revenue growth for the soda giant are expected to be lackluster, according to Refinitiv. What CNBC is watching: Coca-Cola shares are lagging not only the broader market but rival PepsiCo as well. The stock is down 1.88% year to date, while PepsiCo is up 5.3%. That said, UBS analyst Peter Grom thinks that Coca-Cola is "is among the best positioned given strong underlying growth, consistent share performance, and a proven ability to generate positive price/mix using a variety of levers." What history shows: Coca-Cola earnings beat analyst expectations 72% of the time, and the stock averages a small gain after the report is released, according to Bespoke. However, shares have fallen in two of the last three earnings days. Boeing is set to report earnings in the premarket, with a call scheduled at 10:30 a.m. ET. Last quarter: BA said it plans to increase 737 Max production . This quarter: Refinitiv data shows analysts expect Boeing revenue grew by around 10% from the year-earlier period. What CNBC airlines reporter Leslie Josephs is watching: "Boeing is racking up new orders this year during a major travel boom, and deliveries are picking up the pace, but how quickly can the aerospace giant ramp up its production rates? Executives are likely to face questions about any costs and delivery impact from a fittings problem it detected on some of its 787 Dreamliners. They're sure to also be asked about how a brief strike at key 737 Max supplier Spirit Aerosystems will impact its costs and its plans to increase output this year. The conference call on Wednesday is also setting the stage for an update on certification processes for the 737 Max 7 and Max 10, the smallest and largest-models of the best-selling aircraft, respectively." What history shows: Boeing earnings exceed estimates 69% of the time, according to Bespoke. The stock has also risen in the last two earnings days. However, it dropped nearly 9% in October after posting its third-quarter numbers. Chipotle Mexican Grill is set to report earnings after the bell, with a call expected at 4:30 a.m. ET. Last quarter: CMG earnings and revenue beat expectations as restaurant traffic grew. This quarter: Chipotle is expected to report strong year-over-year earnings growth, per Refinitiv. What CNBC is watching: Chipotle shares have been on fire this year, up 51%, and Wells Fargo analyst Zachary Fadem expects the company's second-quarter report to keep the momentum going for the fast-casual chain. He also said that last week's "anouncement that CMG would be entering the Middle East via its first franchise agreement is a key piece to unlocking its massive white space opportunity that should: a)lead to unit growth acceleration above its current 8-10% target; b) be nicely accretive to EBIT margins over time." What history shows: Bespoke data shows Chipotle earnings beat expectations 76% of the time, while the stock advances an average of 1.8%. Meta Platforms is set to report earnings after the close. Corporate leadership is slated to hold a call at 5 p.m. ET. Last quarter: META popped on the company's first sales increase in four quarters . This quarter: The social media giant's earnings are forecast to have grown by nearly 20%, Refinitiv data shows. What CNBC social media reporter Jonathan Vanian is watching: "Investors will be focusing on whether the social networking giant can continue weathering the still-turbulent digital advertising market better than its peers such as Snap and Twitter. In April, Meta posted its first quarterly sales increase after three straight periods of declines, indicating that the company's worst-days are behind. Since then, several research firms that have surveyed the advertising market have said that some major advertisers have decided to increase their digital ad spend, which would benefit Meta as it is still one of the biggest online ad platforms in the world. That said, other analysts have said that small businesses are still worried about the economy and are not prepared to increase their marketing budgets, which could impact Meta considering the tech giant relies heavily on the spending of small companies. One advantage that Meta has over peers like Snap, however, is its sheer size and its investments in artificial intelligence technologies to improve its ad-targeting systems, which are beginning to show performance improvements after being hit by Apple's 2021 iOS privacy update." What history shows: Meta's earnings have topped analyst forecasts 86% of the time, while the stock averages a gain of nearly 2%, according to Bespoke. Thursday McDonald's is set to report earnings in the premarket, followed by a call at 8:30 a.m. ET. Last quarter: Traffic growth in the U.S. lifted MCD earnings above expectations. This quarter: Analysts polled by Refinitiv expected McDonald's earnings and revenue grew by nearly 10% year over year. What CNBC is watching: McDonald's in the first quarter saw greater traffic growth in the U.S. even as prices rose. But, can the fast-food chain keep that trend going? Jefferies' Andy Barish thinks so. He recently raised his Q2 same-store sales growth forecast to 8.5% from 6.5% "given the success of various promos & other drivers." What history shows: McDonald's earnings only exceed expectations 56% of the time, Bespoke data shows. That said, the company's bottom line has outperformed estimates in eight of the last 10 quarters, according to FactSet. Southwest Airlines is set to report earnings before the bell. Management is slated to hold a call at 12:30 p.m. ET. Last quarter: LUV posted a wider-than-expected loss as a holiday season crisis stretched into 2023 . This quarter: Southwest airlines are expected to have fallen 15% from the year-earlier period, per Refinitiv. What CNBC airlines reporter Leslie Josephs is watching: Southwest's competitors are breaking records, crediting a seemingly endless travel boom led by international travel. But investors will want to know where that leaves the largest domestic U.S. airline by passengers, as popular destinations face more competition this year from abroad. The latest inflation read showed a decline in fares and executives are likely outline how fares are holding up. What will be key is Southwest executives' commentary from after the peak summer travel season. Executives are also likely to give an update of its efforts to improve its technology to avoid a repeat of the mass flight cancellations during the 2022 year-end holidays." What history shows: Southwest's second-quarter results beat earnings estimates 71% of the time, per Bespoke. However, the stock averages a 1.6% loss on the back of that report. — CNBC's Michael Bloom contributed reporting.