United States Steel Corporation (N:X)
Materials - Metals & Mining | Reports January 26, after the close.
The Estimize consensus calls for EPS of -$0.82, still 3 cents higher than Wall Street, but reflecting a downward trend. Profit estimates have slid 64 cents in the past three months. Revisions activity for revenues are not as steep, but the current estimates of $2.515B still reflects a 12% drop during that period.
What to Watch: After a dismal year, the steel industry is poised to continue its drop-off in 2016. China’s slowdown, which is expected to carry into 2016, has had huge implications for commodities and especially steel. China is the largest producer of steel, but its falling demand forced steel prices down by 5% in Q4 alone, and nearly 60% in 2015. Continually dropping oil prices have also been crippling for US Steel. The company produces steel pipes and tubes used in gas drilling and exploration. With Brent Crude declining 30% in Q4, so has demand from energy companies for US Steels products. Just last week the company announced they were laying off close to 700 workers in its Texas pipe plant.
eBay (O:EBAY)
Information Technology - Internet Software & Services | Reports January 27, before the open.
The Estimize consensus calls for EPS of $0.50, one cent above the Wall Street consensus and two cents above corporate guidance. Profit estimates have continually dropped since EBAY’s Q3 2015 report, falling 12% since then. Revenue estimates have seen an even deeper cut of 15%, currently expected to come in at $2.306B, nearly $10M below the Wall Street estimate.
What to Watch: After an abysmal third quarter, eBay is slowly losing ground among the top e-commerce websites. The online auction house continues to transition away from its core business in light of Amazon.com's (O:AMZN) booming success. More recently, eBay has begun encouraging users to utilize a fixed price listing which is believed to help move products and boost sales. Fixed pricing is somewhat similar to Amazon’s model and had always been a secondary option to eBay's (O:EBAY) core business. However, the competitive pressure from Amazon has forced eBay’s hand as the company is poised for a massive YoY contraction. Moreover, currency headwinds have contributed to declining growth as a strong dollar has negatively impacted worldwide operations. eBay remains in flux as it attempts to recover from its separation with online payment system PayPal (O:PYPL). With stiff competition, currency headwinds, and the loss of PayPal working against it, eBay’s fourth quarter earnings are expected to underwhelm investors.
Facebook (O:FB)
Information Technology - Internet Software & Services | Reports January 27, after the close.
The Estimize consensus calls for EPS of $0.69, an increase of 13% over the past three months. Revenue expectations of $5.385B have also been lifted in that period by 6%.
What to Watch: The social-media darling is poised to close an impressive 2015 when it reports fourth quarter earnings. Last quarter, Facebook reported 1.55B monthly active users (MAU), a resounding 14% YoY increase. This is crucial in the industry because a stronger social network leverages more opportunities for valuable interactions, user growth and revenue. Compared with its peers, Twitter (N:TWTR) and LinkedIn (N:LNKD), Facebook is far ahead in both MAU and DAU. Facebook has also developed an interest in growing internationally. Despite lower revenue per user in emerging markets, Mark Zuckerberg has been drawn to expanding in India, home to more than one billion people who are not connected to the internet. By reaching a larger audience, Facebook’s instant ads will create more value for advertisers.
The Facebook of today is drastically different than the one that went public in 2012. It no longer relies solely on ad revenue and has expanded its ecosystem to services and applications. Notably, Facebook’s past acquisitions of WhatsApp, Oculus Rift, and Instagram have performed remarkably well. This March, Facebook will start shipping the Oculus Rift virtual reality device, creating a potential source for long-term revenue growth. WhatsApp is approaching a record one billion users while Instagram has more than 400 million users. Facebook’s newest partnership, and possibly biggest, with RBS (L:RBS), will work on a new enterprise product “Facebook at Work” to connect company employees around the world. With many new initiatives in place, Facebook’s revenue grew an impressive 40% over each quarter of 2015 and shows no sign of waning in 2016.
Electronic Arts (O:EA)
Information Technology - Software | Reports January 28, after the close.
The Estimize community is looking for EPS of $1.82 on EA — a 10 cent, or 6% increase since its last report in October. Revenues have been trending higher as well, but not to the same degree. Expectations of $1.8B have increased 2% since October.
What to Watch: Best known for FIFA and Madden, Electronic Arts (EA) is poised for huge fiscal third quarter earnings. On the heels of its earnings call, Bank of America (N:BAC) upgraded the video game provider from neutral to buy. EA has been wildly successful following the release of the 7th movie in the Star Wars series. Disney was not the only company to benefit from the Force Awakens and about a month before the movie was released, EA released its latest game, Star Wars: Battlefront. With just a few months on shelves, the game surpassed EA’s target of 13 million copies sold thanks to a strong box office performance from the Force awakens, strong digital sales, and in-game purchasable content. Other EA games have also performed well during this time due to strong holiday sales of Playstation 4 and Xbox One consoles. Besides console games, EA produces mobile games for smartphones and tablets with Madden NFL Mobile the third-highest grossing iPhone game.
Chevron (N:CVX)
Energy - Oil, Gas & Consumable Fuels | Reports January 29, before the open.
The Estimize consensus calls for EPS of $0.60, still 9 cents above the Wall Street consensus, but an 18% drop in the past three months. Revenues of $29.41B have also dropped 7% in that time.
What to Watch: The downward trend commodities took in 2015 have had large implications for energy corporations around the world. Headlining this free-fall, oil took its biggest dive in Q4 2015 with the price of Brent Crude dropping 30% and WTI falling nearly 20%. Oil has struggled to stay above $25 a barrel as a strong dollar and geopolitical issues drag down prices. For Chevron, plunging oil prices have led to a steep decline in upstream services while the downstream segment remarkably withstood the volatility. Consequently, Chevron has begun implementing cost saving initiatives to sustain operations during low oil prices. Recent moves include downsizing and reducing capital expenditures aimed to procure additional cash flow. Even so, shares fell 20% in 2015 and the company is poised for a disappointing fourth quarter.