With the majority of earnings reports having been released over the past three weeks, the picture that's emerged is of a healthily profitable corporate America that's facing low cost pressures and upbeat forecasts for the remainder of 2019. The U.S. economy is supporting these positive undercurrents with strong job creation and a low rate of inflation—two crucial factors to keep the Federal Reserve on the sidelines for an extended period of time.
Amid all these positive developments, there remain a few high-profile corporate names still to release first quarter earnings. We're watching these three stocks along with investors to help augment and encapsulate the earnings data released during the past three weeks:
1. Disney
Trading at $134.33 as of Friday's close, less than 1% below a record high of $135.31, shares of the Walt Disney Co. (NYSE:DIS) will be tested when the House of Mouse releases Q2 2019 earnings on Wednesday, May 8, after the market close.
On average, analysts are expecting the company to post $1.59 a share profit, down from $1.84 a year ago. Revenue is expected to fall 1% to $14.39 billion. However, this time around, historical numbers are probably not too relevant for the media giant, which recently embarked on a major growth push by transforming itself into a modern entertainment provider, with a focus on direct-to-consumer streaming services, including its soon-to-be launched, flagship Disney+ offering.
The company plans to introduce its Disney+ service later this year. Expectations are that it will pose a major challenge to Disney's main rival, Netflix (NASDAQ:NFLX). With this new growth driver, Disney will also be showing the strength of its existing portfolio.
The company’s shares hit record levels last week, after its latest film release, "Avengers: Endgame" shattered box-office records, making $1.22 billion globally in its debut, further brightening the outlook for the Disney’s studio division. With this upbeat environment for Disney stock, the possibility of escalating costs and the company's guidance for the rest of 2019 will be the two most important details to focus on.
2. Lyft
The San Francisco-based ride-hailing company, Lyft, Inc. (NASDAQ:LYFT) will release its Q1 report on Tuesday, May 7, after the market close. This will be the initial earnings report for the company since it went public in late March. Forecasts call for a net loss of $4.81 a share on revenue of $740.21 million.
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After its very successful IPO a bit more than a month ago, which allowed Lyft to raise $2.34 billion from the public markets, the stock's performance since has been disappointing. Lyft shares closed on Friday at $62.51, more than 20% lower than where they debuted at the IPO, indicating investor nervousness for the loss-generating company, as the competition in the ride-hailing business intensified globally.
Tuesday’s earnings report may help allay investor fears and reinforce the company’s long-term growth potential. The hope is the release will show its strategy is helping build a path to profitability after it incurred a $911 million loss during full-year 2018.
3. Berkshire Hathaway
Berkshire Hathaway Inc. (NYSE:BRKa), (NYSE:BRKb) will likely see some positive activity after its chairman and CEO Warren Buffett accelerated the repurchase of shares of his company's investment arm in the first quarter of 2019.
The Omaha, Nebraska-based conglomerate repurchased $1.7 billion worth of its stock after Berkshire went through a weak period. The amount the company spent on stock buybacks during Q1 was more than the $1.3 billion that it spent on share repurchases in 2018.
Berkshire's B-class shares traded at $218.60 on Friday, up 8% so far this year, underperforming the S&P 500 which jumped more than 17% during the same period. That poor performance shows the predicament that Buffett faces in an environment when asset prices have swelled to the point where it doesn’t make sense for the investment czar, often referred to as the Oracle of Omaha, to make a big acquisition.
Yesterday, during it's much watched annual meeting, Berkshire Hathaway said it swung to a big quarterly profit, fueled by gains in its stock investments. The $21.66 billion overall profit, or $13,209 per Class A share, is better than its year-earlier net loss of $1.14 billion, or $692 per share, and a fourth-quarter net loss of $25.39 billion.
These abnormal performance highlights are what Buffett has called the “wild and capricious” and, in his view, meaningless swings caused by an accounting rule requiring the reporting of unrealized stock gains with earnings.