Every time earnings season rolls around, it’s a great idea to pay close attention to the companies that may set the tone in the market for the coming quarter. These can either be established leaders that deliver huge results or surprise winners that surpass all analyst expectations and leave investors rushing to gain exposure. You can also use earnings season as an opportunity to figure out which stocks might become future leaders and to gain direct insight into which industries have the best prospects going forward.
Several huge earnings reports are coming up in April that are each going to be very important in determining the overall direction of the market in the coming months. They also might provide some insight into how the economy is doing and about whether or not we are making any progress in the recovery from the pandemic. Let’s take a closer look at 3 huge earnings reports to watch in April.
1. Amazon
All of the FAANG stocks are good names to watch when they report their earnings each quarter, especially to gauge overall market sentiment after each release. For example, last quarter we saw a lot of the big tech stocks such as Amazon (NASDAQ:AMZN) and Apple (NASDAQ:AAPL) sold after reporting very strong earnings, which was a clue that a market pullback was on the way. This is a great reason to watch Amazon’s earnings and how the market reacts when the e-commerce giant delivers its Q1 2021 results on Apr. 29.
Amazon has a strong track record of surpassing analyst estimates for their earnings, and given the fact that the company is benefitting from growth in e-commerce and cloud computing, this quarter should be another strong one for the company. It will be very interesting to see how much the recent stimulus checks benefitted the company’s sales and to track the amount of money Amazon continues spending to deal with the impacts of the pandemic. Make sure to listen for management’s forward guidance, which will likely be more important than the company’s actual results in terms of where the stock will go. Keep in mind that last quarter, the company announced a bombshell that CEO Jeff Bezos would be stepping down in the third quarter. Big headlines are always a possibility during these releases, so keep that in mind.
2. Mastercard
Another huge earnings report that will reveal a lot about the state of the economy at this time is Mastercard (NYSE:MA), which reports its Q1 2021 results on Apr. 29. As the world’s second-largest electronic payments network, Mastercard plays a critical role in the global financial system and enables electronic forms of payment for consumers, financial institutions, merchants, and other organizations. Mastercard’s payment volumes were hit hard in 2020 as spending dropped due to the pandemic, which resulted in the company’s revenues declining by 9% year-over-year.
That's a big reason why this one is so important, as Mastercard’s revenue is expected to rebound sharply in 2021 and the company’s Q1 numbers will give investors insight into how quickly consumer spending is bouncing back. There’s also the fact that many consumers use Mastercard to book their travel, which means that this company’s earnings could be an indication of the state of the travel sector. Finally, investors should be interested in the company’s cross-border revenue number, as that figure can give us a sense of how the economic recovery is going outside of the United States.
3. Caterpillar
Caterpillar (NYSE:CAT) has been one of the big winners in the industrial sector so far this year, as the stock has rallied over 25% year-to-date. As a major manufacturer of construction and mining equipment, diesel and natural gas engines, industrial gas turbines, and diesel-electric locomotives, this company’s earnings will tell us a lot about global economic growth in a post-COVID world. Many investors are wondering just how much a strong housing market will impact Caterpillar’s sales, and how much the changes in oil prices are impacting the company’s bottom line.
Caterpillar’s sales and revenues declined by 15% to $11.2 billion in Q4 2020, and it will be interesting to see just how quickly things are rebounding for this cyclical company. Investors should also pay special attention to Caterpillar’s forward guidance, especially given the fact that President Joe Biden’s $2 trillion infrastructure spending plan is on the horizon. Finally, keep an eye out for any dividend increases from the company when Caterpillar reports its Q1 2021 earnings on April 29th before the bell.
Amazon is a part of the Entrepreneur Index, which tracks some of the largest publicly traded companies founded and run by entrepreneurs.