A Big Week for Earnings: Apple, Facebook, Netflix, Starbucks (and some Rookies)
There's never a dull moment on Wall Street. Let's go over some of the items that will help shape the week that lies ahead.
1. Apple Polishing: It's amazing what being a consumer electronics tastemaker can do for your valuation.
A dozen years ago, Apple (AAPL) was a company making cool computers owned by a niche audience. Then came the iPod, iPhone, and iPad.
Macs are now a small part of Apple's business. The company lives and dies by its iPhone, and thankfully the revolutionary smartphone has been growing nicely with every incarnation.
Apple is now the country's most valuable company in terms of market capitalization, and it will get a chance to validate that distinction when it reports its quarterly results on Tuesday afternoon. Wall Street sees profitability soaring 33% on a 31% top-line surge. Outside of a rare quarterly miss three reports ago, Apple has historically blown past analyst estimates. That's a good thing to remember ahead of the report.
2. California Streaming: Netflix (NFLX) has come a long way over the past year, and that's not necessarily a compliment.
The stock peaked above $300 last summer. The company also earned $1.26 a share during last year's second quarter, the largest three-month profit in the video service's short yet colorful history.
These days the stock is trading in the double digits, and analysts feel that Netflix will be barely profitable when it reports on Tuesday.
This should still be an interesting report. CEO Reed Hastings turned heads when he revealed that the company served up more than a billion hours of video last month. The record showing bodes well for the growth of its streaming service, though even Netflix has conceded that its original DVD offering will continue to shrink in profitability with every passing quarter.
3. Good to the Last Drop: This is going to be a big year for Starbucks (SBUX). Beyond growing its global reach as well as its menu, the baron of baristas will also introduce its first single-serve coffeemaker later this year. The system will make both traditional coffee and fancier espresso-style beverages.
For now, investors will have to simply pour themselves a cup of earnings. The java giant reports on Thursday. Analysts see a profit of $0.45 a share, well ahead of the $0.36 a share that Starbucks brewed a year earlier. If Starbucks lives up to market expectations it will be a caffeinated report, indeed.
4. Mark My Words: Facebook (FB) hasn't made too many friends since going public two months ago. The leading social networking website is trading well below its original $38 price. There are also reports of declining use in some countries.
However, another report indicated that ad rates at Facebook are up a hearty 58% and that the click-through rates on its new sponsored news-feed ads are also going through the roof.
A strong report when Facebook reports on Thursday is essential. It will be the company's first time to impress the market since going public. If the social networking website operator with more than 900 million active users fails to wow the cynics, it will continue to trade as a busted IPO.
5. Bring on the Rookies: Facebook isn't the only recent IPO that will be reporting this week. On-demand 3-D printing specialist Proto Labs (PRLB), Expedia spinoff TripAdvisor (TRIP), vetted reviews website Angie's List (ANGI), doughnut king Dunkin' Brands (DNKN), and vacation property booker HomeAway (AWAY) will also be sharing the stage as companies that have gone public over the past year.
None of these companies went public after Facebook's May debut.
Facebook's poorly received offering froze the pipeline of potential deals for weeks. Companies are just now starting to trickle through, but retail investors now know that getting in on an IPO isn't always a ground-floor opportunity.
Longtime Motley Fool contributor Rick Munarriz does not owns shares in any of the stocks in this article, except for Netflix. The Motley Fool owns shares of Facebook, Starbucks, Apple, TripAdvisor, and Netflix. Motley Fool newsletter services have recommended buying shares of HomeAway, Starbucks, Apple, Netflix, Proto Labs, and TripAdvisor. Motley Fool newsletter services have recommended writing covered calls on Starbucks, creating a bull call spread position in Apple, and writing naked calls on Dunkin' Brands Group.