Earnings Previews: Netflix, United Airlines, Western Alliance Bancorp
Shortly after Monday’s opening bell, the Dow Jones industrials traded up 0.07%, the S&P 500 up 0.07% and the Nasdaq 0.17% higher.
Before markets opened on Monday, M&T Bank posted better-than-expected profits thanks to higher interest rates. Net interest income doubled to $1.83 billion year over year, even though deposits dropped by 3%. The stock traded down about 1.6% early Monday.
Charles Schwab beat the consensus earnings per share (EPS) estimate but missed slightly on revenue. Shares traded down about 2.6% Monday morning.
State Street failed to meet or beat EPS and revenue expectations. Net interest income rose about 50% year over year, but net income overall was down more than 9%. The stock was hammered Monday morning, down 16.5% in the early going.
Bank of America, BNY Mellon and Goldman Sachs are scheduled to report first-quarter earnings before U.S. markets open on Tuesday, along with Ericsson, Johnson & Johnson and Lockheed Martin.
Here is a look at three companies set to report first-quarter results after markets close on Tuesday.
Netflix
When Netflix Inc. (NASDAQ: NFLX) reported first-quarter earnings one year ago, sales came in less than 1% below the consensus estimate and profits jumped 21%. The stock price instantly fell by 35%.
Since then, shares have added nearly 50% after the company reported that its new ad-supported subscription plan gained some traction in the December quarter and Netflix’s announcement (finally) of a crackdown on password sharing. What the company has to say about subscription growth, particularly on the ad-supported plan and how it plans to boot freeloaders without making everyone mad, will count for more than the actual numbers, provided the numbers are not too weak.
Of 42 analysts covering the stock, 21 have a Buy or Strong Buy rating, while another 18 rate the stock at Hold. At a recent price of around $338.60 a share, the upside potential based on a median price target of $375.00 is 10.8%. At the high price target of $440.00, the upside potential is about 29.9%.
First-quarter revenue is forecast at $8.18 billion, which would be up 4.15% sequentially and by 3.9% year over year. Adjusted EPS are forecast at $2.86, up from $0.12 in the prior quarter but down 19% year over year. For the full 2023 fiscal year, analysts expect to see EPS of $111.42, up 14.8%, on sales of $34.37 billion, up 8.7%.
Netflix shares trade at 29.7 times expected 2023 EPS, 23.5 times estimated 2024 earnings of $14.40 and 18.9 times estimated 2025 earnings of $17.90 per share. The stock’s 52-week trading range is $162.71 to $379.43. Netflix does not pay a dividend. Total shareholder return for the past 12 months was negative 0.73%.
United Airlines
Over the past 12 months, United Airlines Holdings Inc. (NASDAQ: UAL) stock has slipped by about 7.7%, significantly less than the decline of more than 20% to rival Delta’s stock. And that is after United forecast a loss of $0.60 to $1.00 per share a month ago. The expected loss includes an earlier-than-expected accrual of a pay agreement with its pilots’ union. That will boost second-quarter earnings, and the airline expects full-year earnings to come in at its earlier forecast level.
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