3 Stocks to Watch Next Week: IBM, Netflix, Tesla Motors

 | Jul 17, 2022 06:34AM ET

  • Some of the largest US companies are scheduled to report next week.

  • Netflix’s subscriber growth is in focus after a 70% plunge in its stock this year.

  • Tesla, which is dealing with the production loss from China shutdowns, reports Wednesday.

    • Earnings will take the center stage next week when some of the largest US companies begin reporting their latest quarterly numbers amid concerns that the four-decade high rate of inflation, rising interest rates, and persistent supply-chain disruptions will slow growth.

    In addition to hard numbers, investors will be closely scanning the earning statements and the management comments about the future outlook to look for signs of softening demand, cost cutting measures, or changes in capital spending plans.

    The highest inflation in decades is forcing the US Federal Reserve to pursue an aggressive monetary tightening, a move which has hurt businesses and households alike, and made consumers more pessimistic about the economy.

    Analysts, however, still expect some companies to report higher profits, especially the ones that continue to retain pricing power. Earnings for the S&P 500 companies are expected to gain 5.6%, based on actual reports and estimates, according to I/B/E/S data from Refinitiv. As of Friday morning, 35 S&P companies had reported, and 80% of those reported earnings above forecasts, Refinitiv found.

    Below, we've short-listed three stocks from different sectors we’re monitoring as Q2 earnings season ramps into full swing:

    1. IBM/h2

    IBM (NYSE:IBM) will report its latest quarterly numbers on Monday, July 18, after the market close. Analyst consensus on IBM is for EPS of $2.27 on revenue of $15.09 billion for the quarter ended June 30.

    Big Blue, which is in the middle of a major turnaround, is showing some signs that it is succeeding at bringing additional sales from its cloud business. In its last earnings report, the New York-based company posted sales that topped analysts’ estimates. The results showed strong demand for hybrid-cloud offerings, signaling continued momentum for its transition to a business fueled by cloud-based software and consulting.

    Arvind Krishna, who took over as CEO from Ginni Rometty in 2021, is focusing on artificial intelligence and the cloud to revive growth. Krishna has reorganized the company’s business around a hybrid-cloud strategy, which allows customers to store data in private servers and on multiple public clouds.

    Shares of IBM, which closed Friday at $139.92, have gained about 5% this year, outperforming the Nasdaq-100 Index, which is down 27% during the same period.