4 Large U.S. Corporations Set To Publish Earnings The Week Of July The 14th

Includes: GOOG, IBM, JNJ, JPM
by: The Value Investor


This week will be very busy on the earnings front, 9 U.S. Corporations with a valuation over a $100 billion are expected to report.

Banks and Technology names in particular are expected to share their latest insights.

Please consider the risks when investing in shares over earnings, only maintain positions if you are a long-term investor.

It is officially earnings season the coming week after Alcoa (NYSE:AA) reported a solid set of earnings last week.

Among the biggest companies scheduled to report earnings this week are Google (NASDAQ:GOOG), (NASDAQ:GOOGL), Johnson & Johnson (NYSE:JNJ), J.P. Morgan (NYSE:JPM) and International Business Machines (NYSE:IBM).

Investors will get an update on the latest within banking, technology and pharmaceuticals. Other large companies anticipated to report earnings, but not discussed in this article are Intel (NASDAQ:INTC), Schlumberger (NYSE:SLB), Citigroup (NYSE:C) and Philip Morris (NYSE:PM), among many others.

The following is a quick overview of the expectations from each of those earnings.


The technology company, which originally focused on search engines is now transforming itself to benefit from any emerging super trend involving technology. Google earns most of its money from advertising, but has focused on other operations as well, including Google Glass, Android and Youtube.com, while it experiments with driverless cars, robotics and space travel.

The company is scheduled to release its earnings on Thursday, the 17th of July after the market close. Consensus estimates for earnings stand at $6.26 per share, with analyst estimates ranging from lows of $5.73 to $6.65 per share. In comparison, Google posted earnings of $4.78 per share last year.

Reported revenues are seen at $15.62 billion, which would result in sales growth of 10.7%. Expectations for the quarter have inched up again recently, as Google's shares have recovered alongside other momentum stocks which suffered a reversal earlier this year. Shares are up 9% over the past three months when Google last reported earnings. This means that shares have risen just 3% so far this year.

Johnson & Johnson

The healthcare and pharmaceutical giant is set to release its earnings on Tuesday the 15th before the opening of the bell. The company has seen little news lately in an industry dominated by merger and takeover activity. Of course Pfizer (NYSE:PFE) tried to acquire AstraZeneca (NYSE:AZN) earlier this year while AbbVie (NYSE:ABBV) is reported to be very close to acquire Shire (NASDAQ:SHPG).

While Pfizer's and AbbVie's intentions to make these deals is partially driven by an ¨inversion move," Johnson & Johnson has fewer opportunities to acquire a foreign company to make a similar move. This is as the company already has a very low effective tax rate. 2013's effective tax rate was just 9.5%, but its tax rate came in around fairly low rates of 20%-25% in recent years.

For the quarter, analysts are expecting sales of $1.55 per share, which would have been up by seven cents compared to the year before. Reported sales growth is seen at 6.0%, with total sales expected to come in at $18.94 billion.

J.P. Morgan Chase

J.P. Morgan is set to release its earnings on Tuesday before the market opening. The bank's earnings will follow those releases of some of its competitors. Wells Fargo (NYSE:WFC) released its earnings last Friday, and Citigroup (C) is scheduled to report its earnings on Monday.

Key areas to focus on are of course any potential news flow regarding legacy or potential new investigations which could result in huge multi-billion potential settlements. The focus will also be on the FICC performance of the business over the quarter, the state of the mortgage origination market, and of course, the health of its CEO, Jamie Dimon.

Notably, the softer anticipated investment banking performance, which is particularly seen at the trading business, and the softer housing market will drive an anticipated fall in earnings. Consensus estimates for earnings stand at $1.29 per share, down from a reported $1.60 per share last year. Revenues are anticipated to fall by 8.5%, expected to come in at $23.76 billion.

Despite the soft results, shares have risen in recent times, which might leave some room for a potential disappointment. Shares are up about 8% over the past quarter and have risen some 14% already this year.

International Business Machines

And last but certainly not least is IBM, which is expected to release its earnings on Thursday the 17th of July after the market close.

Analysts are projecting earnings of $4.29 per share for ¨Big Blue,¨ which would mark a significant increase from reported earnings of $3.22 per share last year. This increase in earnings per share would be driven by job cuts and share repurchases, as revenues are seen down by 3.2% to $24.13 billion.

Shares of IBM have been underperforming for a long time. Shares are down by about 3% over the past quarter and are flat so far this year. Over the past year, shares are actually down by 2%, as investors are worried about the lack of sales growth and actual fall in sales. Investors are no longer satisfied with job cuts and large share repurchases in order to achieve its $20 EPS target.

It is worrying to see IBM actually reporting a fall in sales given the current state of the economy. New and emerging competitors as well as innovative business models are creating big competitive threats for the business, while management seems to focus on financial engineering.

Takeaway For Investors

As always, earnings reports do have the potential to move stock prices a lot. The reaction to investors in technology names like Google and IBM can create some volatility in particular. Of course, investors are very worried about the health of Jamie Dimon as well, while they will listen closely to the current state within investment banking and the mortgage market with all of the large U.S. banks scheduled to report their earnings this week.

While things are looking good for corporate America in general, the lack of revenue growth is a major concern for many, as share repurchases and margin expansion have fueled earnings per share growth. To sustain earnings growth, revenues will have to increase going forward.

Please consider the risks when investing in companies when holding your positions over their earnings release, unless you are a truly long-term investor with a long time horizon. Good luck!

Disclosure: The author has no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. The author wrote this article themselves, and it expresses their own opinions. The author is not receiving compensation for it (other than from Seeking Alpha). The author has no business relationship with any company whose stock is mentioned in this article.

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