KEY POINTS
- On Tuesday, the markets showed a range of emotions, with the Dow plunging while the Nasdaq advanced.
- Later this week, earnings announcements are scheduled to be made by both Netflix and Procter & Gamble.
- When you look at these two companies together, you can see how the US consumer market is doing.
These companies can point the stock market in the right direction at a time when it is searching for one.
2023 has been a relatively successful year for the stock market, working hard to recover from its difficulties in 2022. Even though bank earnings announcements significantly negatively impacted the Dow Jones Industrial Average (DJI), the Nasdaq Composite (IXIC) could still register another small gain. At the same time, losses for the S&P 500 (GSPC -0.20%) were relatively small.
Many investors look forward to the quarterly financial reports of several significant players in various industries, even though stock markets were uneven on Tuesday. The reports of consumer goods specialist Procter & Gamble (PG -0.29%) and video streaming behemoth Netflix (NFLX -1.98%) are among the most noteworthy of the reports released this week.
In the following paragraphs, you will understand better why investors are keeping a close eye on these two companies and what you should anticipate from each of their respective reports.
It’s time to tune in to the show.
After the market closes on Thursday, Netflix will make public the financial figures for the company’s fourth quarter. Even though the stock dropped a lot in the first half of 2022, it spent most of the rest of the year making up a lot of what it had lost, and investors are hopeful that what Netflix says about the most recent quarter will help the company keep going in the right direction.
The third-quarter report that Netflix presented to its shareholders three months ago was impressive. Netflix has returned to net subscription growth after experiencing a couple of periods of dropping memberships. The company’s revenue growth decreased year over year and was down slightly from the second quarter.
Earnings were down a little bit, but they were still better than most people had anticipated they would be. In addition, free cash flow began to improve again, and Netflix forecasted to acquire approximately 4.5 million new paid subscribers in the last quarter of the year.
However, the patterns that Netflix observes in the streaming video industry are significantly more relevant than the company’s short-term financial results. The choice made by Netflix to provide a tier supported by advertisements will enable the company to maintain lower monthly prices for price-sensitive customers. This may be the factor that has the potential to have the most significant long-term impact. Even while the current environment for advertisements is vulnerable to disruptions on a macroeconomic scale, the long-term potential of streaming advertisements might be enormous for Netflix.
In the report for this quarter, shareholders anticipate getting a taste of what commercials brought to the table, but the impact won’t probably arrive for at least a few more months after that. Despite this, you can anticipate a significant focus on Netflix’s report when it is released on Thursday evening.
P&G aims to maintain holding up
To a great extent, consumer staples stocks have been able to withstand the bear market downturn, and Procter & Gamble’s stock price is just marginally lower than it was at its all-time high. When the company responsible for well-known brands such as Tide and Pampers releases its financial results for the fiscal second quarter before the opening bell on Thursday morning, investors anticipate that there will be at least some pressure placed on the business.
Most investors anticipate that P&G’s quarterly figures will decline slightly compared to the previous year’s numbers. It is expected that sales will decrease by around 1%, and it is anticipated that earnings will reduce by a slightly more significant percentage, reaching $1.59 per share.
Cost rises have put pressure on Procter & Gamble’s margins, but arguably, the amount of pressure is not as substantial as it has been for other corporations. P&G has the pricing authority to pass through some of its increased expenses to consumers as a result of the strength of its brand, which has also allowed the company to be a cash cow over the long haul.
In general, it will be to the benefit of investors to receive reports from businesses operating in two distinct but significant industries. It will be much simpler to get a feel for how the rest of the earnings season might pan out once we get a more comprehensive look at the state of the consumer market, both in the United States and elsewhere.
