Earnings This Week: US banks, Delta Air Lines & Walgreens

Corporate earnings calendar: October 9 - 14

The third-quarter earnings season kicks off in the US and, as usual, it will be the major banks to kick things off when JPMorgan, Wells Fargo and Citigroup report results at the end of the week. There are earnings out from Pepsi, Delta Air Lines and Walgreens Boots earlier in the week.

Below is a calendar outlining all the major updates we are watching next week:

Monday October 9

N/A

Tuesday October 10

LVMH Q3

Pepsi Q3

Wednesday October 11

N/A

Thursday October 12

Delta Air Lines Q3

Walgreens Boots Q4

Domino's Pizza Q3

Fastenal Q3

Fast Retailing Q3

Hays Q1

Friday October 13

JPMorgan Q3

Citigroup Q3

Wells Fargo Q3

BlackRock Q3

PNC Financial Q3

UnitedHealth Q3

Infosys Q2

 

 

 

DAL stock: Delta Air Lines Q3 earnings preview

The US airline industry warned last month that higher fuel prices, driven by the surge in oil prices, would push up costs and crimp profits in the third quarter and this resulted in Delta Air Lines lowering its guidance.

That caused Delta to recently slide to its lowest level in over four months last week, although it has started to rebound after becoming heavily oversold.

The airline has said EPS should come in between $1.85 to $2.05, and Wall Street has pencilled-in a figure of $1.94. The warning ahead of the results should reduce the potential of any unwelcome surprises this week. Delta’s operating margin should come in at about 13% in the quarter, down from its original hopes for a ‘mid-teens’ margin.

The fact Delta reiterated its earnings goal for the full year will also suggests the airline views the current pressure on profits as temporary, or at least manageable. However, the slide in the share price suggests markets remain concerned that the earnings outlook has deteriorated and unconvinced there won’t be any more bad news to come from the industry in the near-term.

Revenue should rise by a double-digit percentage and hit a new third-quarter record, with demand for travel still buoyant. Still, with the summer season now ending and the outlook for consumer spending darkening, investors will want to see more evidence that consumers are still prioritising travel.

 

WBA stock: Walgreens Q3 earnings preview

Walgreens Boots shares sank to their lowest level since 1998 last month, with the stock having been shaken by a weaker outlook and uncertainty after CEO Rosalind Brewer and chief financial officer James Kehoe left the business, with other directors fulfilling their roles on an interim basis.

That leaves the company rudderless until permanent replacements are found, with investors unsure of what to expect when the new boss arrives. Confirming a replacement would be, generally speaking, welcome as it will provide more certainty to the strategy and outlook.

Walgreens Boots lowered its guidance in the last quarter and said US consumer spending was tightening. Revenue is forecast to rise 7.3% from last year in the fourth quarter to $34.83 billion and adjusted EPS is seen falling 33% to $0.78. Adjusted operating profit is the company’s headline number and analysts see it rising 1.8% to $757.4 million.

Assuming it meets those expectations, it is on course to report a 4.4% rise in annual revenue to $138.49 billion and a 20.6% drop in full-year adjusted EPS to $4.00, which would be at the very bottom of the company’s revised guidance range.

We already have some preliminary guidance for the new financial year, so investors will want to see if Walgreens is feeling more optimistic, pessimistic or largely the same about its prospects than it was three months ago – although the lack of a boss makes any major changes unlikely and raises the likelihood that management will stick with a more cautious view. Walgreens said it is anticipating a mid-single digit rise in adjusted operating profits, with EPS figures to rise at a slower pace due to higher tax rates.