With some of the largest US companies reporting their quarterly earnings in the upcoming week, investors will look for signs of strength after the biggest weekly sell-off in equities over the past two years.
During the five-day period ahead, about a third of the Dow’s 30 mega cap companies are scheduled to release their most recent numbers along with their outlook forecasts for the remainder of this year, including aerospace and defense behemoth Boeing (NYSE:BA) and heavy machinery giant Caterpillar (NYSE:CAT).
These earnings will be released in the wake of the NASDAQ 100 Index suffering its worst weekly performance since March 2020 on concerns that upcoming rising interest rates won’t justify the sky-high valuations of some tech giants.
During this crucial week for the Q4 earnings season, we will be focusing on three mega caps whose earnings could help clarify whether they are still benefiting from the pandemic-driven demand surge that pushed their shares to record high prices in recent months:
1. Tesla
Electric vehicle maker Tesla (NASDAQ:TSLA) will report Q4 earnings on Wednesday, Jan. 26 after the market close. Analysts are expecting $2.26 a share profit on sales of $16.99 billion.
The Austin, Texas-based EV manufacturer earlier this month reported that it had delivered 308,600 vehicles worldwide in Q4, smashing the previous record. The better-than-expected deliveries pushed Tesla’s total sales for the year to more than 936,000, up about 87% over 2020’s deliveries.
This impressive performance showed that the company’s CEO, Elon Musk, is succeeding at overcoming the supply chain issues that are hurting traditional automakers.
The robust demand for Tesla’s cars, however, failed to protect its shares from the pullback that's pressured high-growth tech names since the beginning of this year. Tesla shares are down about 11% since the start of 2022, closing on Friday at $943.90. The stock surged to a record high of $1243.49 in November 2021.
2. Apple
Apple (NASDAQ:AAPL), the maker of the popular and iconic iPhone, as well as computers and smart wearables, is scheduled to report its fiscal 2022, first quarter earnings on Thursday, Jan. 27 after the market close. Analysts, on average, project the company will post $1.89 a share profit on sales of $118.74 billion.
Investors will likely focus on the company’s ability to meet strong demand for its products amid supply chain hurdles which had dented the Cupertino, California-based company's sales in the previous quarter. CEO Tim Cook warned in October that the shortage of semiconductors was affecting “pretty much” all of the company’s products.
During the holiday quarter, Apple’s sales were forecast to hit a record high, fueled by the rollout of new watches, iPads, Mac computers and other items.
Shares of Apple closed at $162.41 on Friday after falling about 8% this month. But that performance is better than the tech-heavy NASDAQ 100's which declined 12% over the same period.
3. Chevron
Chevron (NYSE:CVX) will report Q4 earnings on Friday, Jan. 28 before the market open. The US oil and gas major is expected to post EPS of $3.11 on sales of $44.59 billion, according to consensus forecasts.
In its latest update, the San Ramon, California-based, integrated energy, chemicals and petroleum firm said it plans to use windfall profits to facilitate share buybacks as soaring energy prices boost cash flows. Chevron is considering an expansion of its buyback program after surging natural gas prices and oil-refining returns drove free cash flow to an all-time high in the third quarter.
Rising crude oil prices are now about 70% higher than they were in early 2020, and the International Energy Agency said last week that global oil demand this year will exceed levels seen before the pandemic.
Chevron shares closed on Friday at $126.91, after rising 26% during the past six months.