Though earnings season may be winding down, some big names have yet to report, both this week coming week and next. During Sunday's Bell Ringers podcast, we focused on five noteworthy releases: Uber Technologies (NYSE:UBER), CVS Health (NYSE:CVS), Qualcomm (NASDAQ:QCOM), Roku (NASDAQ:ROKU) and Disney (NYSE:DIS).
Here's what we'll be looking for during each report:
Monday, November 4:
1. UBER: Reports After Markets Close
Ride-sharing service Uber logged in an astounding $5.24 billion loss last quarter, $3.9 billion of which was related to employee compensation. Those are staggering numbers which really tested the market’s patience for losses.
Not very surprising, this quarter will likely be more of the same. This time around Uber is expected to report a quarterly loss of -$0.85 per share, on $3.74 billion in revenue. What we'll be looking at most closely is Uber’s cash flow. While the San Francisco-based company may not yet be in bankruptcy territory—it has $11 billion in cash of which it used about $2 billion in the first half of 2019—any sign it's getting closer to becoming cash flow positive would alleviate investors’ concerns.
Revenue growth is also critical. Uber earnings have lost their explosive momentum, which in 2017 and 2018 was 106% and 42% respectively. During the past three quarters, the service recorded revenue growth of only around 25% for the full period.
Bullish thesis for the stock: ride-sharing as a service needs proven profitability—something that hasn’t yet been established; Uber Eats should show some growth (it lost 1.7% of market share last quarter), and basically Uber has to be hitting on all cylinders. That's likely not going to be the case. Thus, long term, we'll remain on the sidelines.
Wednesday, November 6:
2. CVS Health: Reports Before Markets Open
It's been a weird year so far for CVS, the health care and pharmaceutical chain. The stock is up just 2.5% YTD but it's also up 28% since the beginning of March. The consensus expectation is it will report revenue of $63 billion on $1.77 earnings per share.
Should that occur, it would mark the third consecutive quarter of 30%+ revenue growth for CVS, and would explain the stock's momentum since its March earnings report.
CVS is also on a roll when it comes to same-store sales, arguably the most important metric for retail chains. Last quarter, it reported growth of 4.2% in same-store sales, driven by growth of 7.2% in prescription volumes.
Bullish thesis for the stock: as a rule, health care related stocks depend on an aging U.S. population that's heavily medicated in order to thrive. That's not such a long shot. Plus, its 3% dividend yield, paid out quarterly, make CVS a company worth considering if you’re looking to diversify into health care.
3. Qualcomm: Reports After Markets Close
Last quarter, chip manufacturer Qualcomm issued disappointing guidance. The stock dropped to $68 after its earnings release. Wall Street then expected Q3 EPS to come in at $1.08, while Qualcomm guided lower: EPS between $0.65 and $0.75. Surprise, Wall Street's new expectations is an EPS of $0.71 on $4.7 billion in revenue.
It's worth noting, however that despite much-lowered expectations, Qualcomm is now trading at $83, 10% above where it was before the expectations were lowered. Clearly, markets can—and do—often misprice stocks in the short-term.
Bullish thesis for the stock: long-term, it’s hard to bet against the industry leader in 5G technology. Qualcomm has secured a place for its 5G modems in the next generation of Apple (NASDAQ:AAPL) devices, and macro trends all work in its favor.
4. Roku: Reports After Markets Close
If you can’t handle volatility, don’t even consider Roku. Shares of the company, which operates a TV streaming platform, jumped from $96 in August to $176 in early September, only to plummet back to $98 at the end of September, then vault back to $150 in October. That signals Wall Street's lack of confidence in Roku's valuation model.
The Los Gatos, CA-based company's yearly revenue growth number is the important metric here. And right now, the trend is positive. Last quarter, Roku’s revenue grew 59%, the highest in the past four quarters. It's expected to report revenue of $258 million on a loss of -$0.28 per share. To be honest, the losses are negligible compared to the revenue growth.
Bullish thesis for the stock: Wall Street really loves revenue growth so if Roku meets or beats, expect a big swing after hours when Roku reports.
Thursday, November 7:
5. Disney: Reports After Markets Close
Just about all of Disney’s gains this year (12% YTD) can be traced to a single day—Apr. 11, when the company announced the details of its streaming plans. This week's report won't yet include any streaming revenue since the service isn't scheduled to launch until Nov. 12, but management’s expectations for streaming revenue are likely to overshadow everything else in the current report.
Consensus says Disney will report $19 billion in revenue on earnings of $0.95 per share. If that occurs, it would mark the fourth straight quarter of profitability declines, not that anyone seems to care...everything is permitted when you’re a potential streaming entertainment giant.
Media networks is the segment to watch. Disney’s subsidiaries ABC and ESPN have been struggling due to consumer cord cutting, and while Disney will try to make up for that with its own streaming offering, media networks still represented 33% of Disney’s revenue last quarter.
Bullish thesis for the stock: during the earnings call, Disney's management will probably come out with preliminary sign-ups for Disney+ and provide strong projected subscriber growth.