Insights

12 for 12 - Multinationals are projecting strong growth over the next quarter

17 October 2018  |  NEWS

Summary for this report:

1.  The Goldman Sachs Group, Inc. (NYSE: GS) will report earnings before market open on October 16th, Tuesday.

2.  Johnson & Johnson (NYSE: JNJ) is assuming to report its earnings before market opens on October 16th, Tuesday.

3.  Morgan Stanley (NYSE: MS) will report earnings before market open on October 16th, Tuesday.

4.  UnitedHealth Group Inc. (NYSE: UNH) is going to report its third quarter earnings before market open on Oct 16th, Tuesday.

5.  CSX Corporation (NASDAQ:CSX) will report its earnings after market close on Oct 16th, Tuesday.

6.  IBM will report its earnings after market close on Oct 16th, Tuesday.

7.  Philip Morris International Inc. (NYSE: PM) will report its earnings before market open on Oct 18th, Thursday.

8.  The American Express Company (NYSE: AXP) will release its third quarter earnings after market close on Oct. 18th, Thursday.

9.  Atlassian Corporation Plc (NASDAQ: TEAM) will report its Q1 earnings after market close on Oct. 18th, Thursday.

10.  Intuitive Surgical, Inc. (NYSE: ISRG) is going to report its Q3 earnings after market close on Oct. 18th, Thursday.

11.  PayPal Holdings, Inc. (NYSE: PYPL) is assumed to report its Q3 earnings after market close on Oct. 18th, Thursday.

12.  The Procter & Gamble Company (NYSE: PG) will release its Q3 earnings before market open on Oct. 19th, Friday.


1. The Goldman Sachs Group, Inc.

The Goldman Sachs Group, Inc. (NYSE: GS) will report earnings before market open on October 16th, Tuesday.

Consensus EPS is $5.43 for this quarter and Consensus Revenue is $8.48 billion.

For the second quarter earnings announced in July, EPS was $5.98, which was higher than expected EPS of $4.65. And revenue was $9.40 billion compared with estimation of $8.74 billion, revenue growth was +19.2 percent year-over-year. 

Investment Banking contributed net revenues of $2.05 billion, including $804 million (+7% year-over-year) in Financial Advisory and $1.24 billion (+27% year-over-year) in Underwriting. The firm’s investment banking transaction backlog ranked No.1 for this quarter.

Revenues in Institutional Client Services were $3.57 billion, 17% higher than the second quarter of 2017. Net revenues in Fixed Income, Currency and Commodities, Client Execution were $1.68 billion, 45% higher year-over-year, reflecting significant increases in commodities, interest rate products and credit products. Net revenues in Equities were $1.89 billion, which is flat compare with second quarter in 2017.

Net revenues in Investing & Lending were $1.84 billion, 20% higher year-over-year.

ROE was 12.8% for the second quarter, and ROTCE (return on average tangible common shareholders’ equity) was 13.5%. The firm’s Standardized common equity tier 1 ratio (3) was 12.6%.

(Goldman Sachs Group year to date price chart as of Oct. 17, source from yahoo finance)


2. Johnson & Johnson

Johnson & Johnson (NYSE: JNJ) is assuming to report its earnings before market opens on October 16th, Tuesday.

Consensus EPS is $2.03 for this quarter and Consensus Revenue is $20.04 billion.For the second quarter announced in July, EPS was $2.10, which was higher than expected EPS of $2.07. Revenue surged to $20.83 billion from estimation of $20.39 billion, revenue growth was +10.6 percent year on year.

Worldwide Consumer sales was $3.5 billion for the second quarter 2018, which represented an increase of 0.7% year-over-year, with 1.1% of positive impact from currency.

Johnson & Johnson cut its new guidance for the full-year 2018, including a range of $80.5 to $81.3 billion of revenue from previous estimation of $81.3 billion, and a range of $8.07 to $8.20 of EPS from previous estimation of $8.12.

(Johnson & Johnson year to date price chart as of Oct. 17, source from yahoo finance)


3. Morgan Stanley

Morgan Stanley (NYSE: MS) will report earnings before market open on October 16th, Tuesday.

Consensus EPS is $1.04 for this quarter and Consensus Revenue is $9.61 billion.

For the second quarter earnings announced in July, EPS was $1.30 higher than expected EPS of $1.10. Revenue was $10.61 billion higher than estimation of $10.05 billion and revenue growth was +11.6 percent year-over-year.

Institutional Securities net revenues were $5.7 billion, +18.8% increased, including $1.7 billion (+18.8% year-over-year) in Investment Banking, and revenues of $3.8 billion (+18.8% year-over-year) in Sales and Trading. Within Investment Banking, Advisory revenues of $618 million (+22.6% year-over-year), Equity underwriting revenues of $541 million (+33.6% year-over-year), and Fixed income underwriting revenues of $540 million (+7.1% year-over-year). Within Sales and Trading, Equity sales and trading net revenues were $2.5 billion (+13.6% year-over-year) and Fixed Income sales and trading net revenues were $1.4 billion (+16.6% year-over-year).

Wealth Management reported revenue of $4.3 billion, 2.3% higher than second quarter in 2017.

Compensation expense of $4.6 billion increased from $4.3 billion a year ago. Non-compensation expenses of $2.9 billion increased from $2.6 billion a year ago.

Efficiency ratio for the current quarter was 71% compared with 72% in the prior year quarter.

Morgan Stanley raised quarterly dividend from 25¢ to 30¢. Also, the company announced up to $4.7 billion of repurchasing outstanding common stock for the four quarters, beginning in the third quarter of 2018 through the end of the second quarter of 2019.

ROE was 13.0% for the second quarter, return on average tangible common shareholders’ equity (ROTCE) was 14.9%.

(Morgan Stanley year to date price chart as of Oct. 17, source from yahoo finance)


4. UnitedHealth Group Inc.

UnitedHealth Group Inc. (NYSE: UNH) is going to report its third quarter earnings before market open on Oct 16th, Tuesday.

Consensus of EPS is $3.29, and consensus of revenue is $56.32 billion.

The company announced second quarter financial result in July, with EPS of $3.14 compared with expectation of $3.04. Although revenue growth was +12.1% year-over-year, actual revenue for second quarter was $56.09 billion, which was lower than expectation of $56.10 billion.

The company announced new guidance for fiscal 2018 with a range of $12.5 to $12.75 of EPS, compare with prior of $12.63. Also, the management sees $15.5 billion of operation cash flow for fiscal 2018.

(UnitedHealth Group year to date price chart as of Oct. 17, source from yahoo finance)


5. CSX Corporation

CSX Corporation (NASDAQ:CSX) will report its earnings after market close on Oct 16th, Tuesday.

Consensus of EPS is 92¢, and consensus of revenue is $3.01 billion.

CSX reported better than expectation second quarter result in July. EPS was $1.01 compare with estimated 87¢, revenue jumped +5.8% to $3.10 billion than expected $3.00 billion.

Revenue surges because of cost cutting measures, that total expense was 8% down than the second quarter in 2017, total cost was 2% less year-over-year even exclude restructuring charges.

Compared to 2017 second quarter, the adjusted operating results surged 20%.

CSX’s Intermodal segment gains +2% in volume, with merchandise shipments 1% down, coal freight was +7% up, Ag and Food Products were +2% up. Pricing for most of the segments was higher in Q2, and result with +4% up.

Chemicals contributed big to the earnings. Auto segment was in line and light truck product was mainly used. Forest Products increased, driven by strong construction demands. Fertilizer declines because of previously announced factory closure. Coal for export was strong.

CSX’s operating ratio for second quarter hit record of 58.6%.

The management raised new guidance of revenue from +3% to around +5%.


(CSX year to date price chart as of Oct. 17, source from yahoo finance)


6. International Business Machines Corporation (IBM)

IBM will report its earnings after market close on Oct 16th, Tuesday.

Consensus of EPS is $3.40, and consensus of revenue is $19.06 billion.

IBM’s Q2 earnings announced in July beat the expectation. EPS was $3.08 compared with expectation of $3.04, and revenue was $20 billion compared with expectation of $19.85 billion. Revenue growth was +3.7% year-over-year.

Strategic imperatives revenue was $39.0 billion over last 12 months, which was 15 percent up compared to the prior 12 months.

Cloud revenue was $18.5 billion over last 12 months, up 23 percent compared to the prior 12 months.

SaaS (As-a-service) annual exit run rate for cloud revenue was $11.1 billion in the quarter, up 26 percent year-over-year.

IBM raised guidance for fiscal 2018 EPS to $13.80 from prior of $13.78. Also, the management forecasts free cash flow for the full year to be $12 billion.

(IBM year to date price chart as of Oct. 17, source from yahoo finance)


7. Philip Morris International Inc.

Philip Morris International Inc. (NYSE: PM) will report its earnings before market open on Oct 18th, Thursday.

Consensus of EPS is $1.28, and consensus of revenue is $7.16 billion.

The company released better than expectation second quarter earnings in July with actual EPS of $1.45 beat expectation of $1.23, and revenue of $7.73 billion higher than expectation of $7.53 billion. Revenue growth was +11.7% year-over-year.

Cigarette and heated tobacco unit shipment volume reached 201.7 billion units, +0.9% up year-over-year. Although cigarette shipment volume decreased to 190.7 billion units, 1.5% down, heated tobacco unit shipment volume surged to 11.0 billion units, up by 73.0%.

The company cut down guidance for fiscal 2018 to a new range of EPS from $5.02 to $5.12, compared with prior guidance of EPS of $5.15 to $5.30. Analysts forecast EPS for fiscal 2018 to be $5.14.

(Philip Morris International year to date price chart as of Oct. 17, source from yahoo finance)

8. The American Express Company

The American Express Company (NYSE: AXP) will release its third quarter earnings after market close on Oct. 18th, Thursday.

Consensus of EPS is $1.77, and consensus of revenue is $10.04 billion.

The company reported Q2 earnings in July. Although Q2 EPS of $1.84 was higher than expectation of $1.81, revenue missed expectation. Actual revenue was $10 billion lower than estimated revenue of $10.05 billion. But revenue growth was +9.0% year-over-year.

Global Consumer Services Group contributed second-quarter net income of $770 million, up 25 percent from a year ago.

Global Commercial Services reported second-quarter net income of $564 million, up 18 percent year-over-year.

Global Merchant and Network Services contributed second-quarter net income of $543 million, up 14 percent from a year ago.

Provisions for losses were $806 million, up 38 percent from $583 million a year ago.

The company acquired 2.9 million new cards during second quarter, and total card member spending was 10 percent up.

Although analysts forecast fiscal 2018 EPS to be $7.24, the company insists to original guidance EPS of $6.90 to $7.30. The management also comments that the final EPS may be higher than the current guidance. Also, American Express raised guidance of revenue from +8.0% to +9.0% year-over-year this time.

(The American Express Company year to date price chart as of Oct. 17, source from yahoo finance)

9. Atlassian Corporation Plc

Atlassian Corporation Plc (NASDAQ: TEAM) will report its Q1 earnings after market close on Oct. 18th, Thursday.

Consensus of EPS is 19¢, and consensus of revenue is $260 million.

The company released its Q4 earnings for fiscal 2018 in July, which beat the expectation. Actual EPS was 13¢ compare with expectation of 12¢, revenue was $244 million which beat expectation of $233 million, and revenue growth was +39.9% year-over-year.

The management raised fiscal 2019 Q1 guidance in July. Under the new guidance, the revenue is expected to be in the range of $258 million to $260 million, compared with estimation of $252 million. Also, the company forecasts the EPS of 19¢ compare with prior estimation of 15¢.

For fiscal year 2019, the company expects total revenue to be in the range of $1,146 million to $1,154 million, compared with prior estimation of $1,110 million. And the management forecasts EPS for fiscal year 2019 to be 77¢ higher from prior estimation of 66¢.

Atlassian announced to enter into a strategic partnership with Slack in July. Before working with Slack, Atlassian had Stride and Hipchat in the real-time communications market. Atlassian announced to exit the communications space. Also, Slack has acquired the intellectual property for Stride and Hipchat Cloud, both of which will be discontinued.

(Atlassian year to date price chart as of Oct. 17, source from yahoo finance)

10. Intuitive Surgical, Inc.

Intuitive Surgical, Inc. (NYSE: ISRG) is going to report its Q3 earnings after market close on Oct. 18th, Thursday.

Consensus of EPS is $2.65, and consensus of revenue is $915 million.

For the second quarter, Intuitive reported EPS of $2.76 to beat analyst expectations for $2.49. Revenue of $909 million grew 19.8% and topped the consensus of analysts of $877 million.

The number of procedures completed by Intuitive's da Vinci surgical systems was surged from 166 a year ago to 220.

(Intuitive Surgical year to date price chart as of Oct. 17, source from yahoo finance)

11. PayPal Holdings, Inc.

PayPal Holdings, Inc. (NYSE: PYPL) is assumed to report its Q3 earnings after market close on Oct. 18th, Thursday.

Consensus of EPS is 54¢, and consensus of revenue is $3.66 billion.

PayPal announced Q2 earnings in July which beat the expectations. With +23.0% up year-over-year, revenue reached $3.86 billion from expectation of $3.81 billion. Actual EPS of 58¢ was higher than 56¢ too.

During Q2, PayPal acquired 7.7 million new accounts. There were 2.3 billion payment transactions, which was 28% up year-over-year, and total payment volume (TPV) was 29% up to $139 billion.

The number of payment transactions per active account was 35.7.

Although PayPal’s Q2 results beat the expectation, the company cut down the guidance for both Q3 and whole fiscal year 2018.

The company showed a range of 53¢ to 55¢ of EPS under the new guidance, while EPS expectation was 54¢. Also, compared with prior expectation revenue of $3.71 billion, PayPal forecasted Q3 revenue from $3.62 billion to $3.67 billion.

PayPal expects fiscal year 2018 revenue of $15.3 billion to $15.5 billion under new guidance from prior estimation of $15.39 billion. Also, the management sees EPS in a range of $2.32 to $2.35 from prior expectation of $2.34.

(PayPal year to date price chart as of Oct. 17, source from yahoo finance)

12. The Procter & Gamble Company.

The Procter & Gamble Company (NYSE: PG) will release its Q1 earnings before market open on Oct. 19th, Friday.

Consensus of EPS is $1.10, and consensus of revenue is $16.53 billion.

P&G announced its Q4 report for fiscal year 2018 in July. Although EPS beat expectation, revenue missed the estimation. Actual EPS for Q4 was 94¢ higher than expected EPS of 90¢. Revenue dropped to $16.5 billion compared with expectation of $16.52 billion. Revenue growth was +2.6% year-over-year.

Organic revenue growth rate was +1%

For P&G's fiscal 2019, the company said it expects its EPS to grow 3 to 8 percent up from its 2018 core EPS to a range of $4.35 to $4.56 while the estimation was $4.39.

Also, the company forecasts revenue for fiscal year 2019 to grow 0%-1% to a range of $66.8 billion to $67.5 billion under the new guidance, compared with prior expectation of $67.74 billion.

(Procter & Gamble year to date price chart as of Oct. 17, source from yahoo finance)




This report was contributed by Takao Hirose, Contextual Investments, LLC., published on 12/10/2018.

Risk Disclaimer: The information above is of general nature only and does not take into account your objectives, financial situation or investment needs. Prior to you make an investment decision, please make sure you carefully read and fully understand our Financial Services Guide, Terms and Conditions, Privacy Policy and other relevant documents that you can obtain from this website. Monex Securities Australia Pty Ltd (AFSL No. 363972; ABN 84 142 210 179) is the Financial services provider. Financial products trading carries risks and may not be suitable for all investors. You are strongly recommended to seek independent financial advice before making any investment decisions.

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