20 February 2015 at 11:31 GMT
- Big names will unveil their earnings next week
- HSBC's earnings release is barometer for global banking
- BHP's shareholders demanding answers from management
By Peter Garnry
Next week is going to be big, with 160 companies reporting earnings in the S&P 1200 Global Index.
What makes next week even more interesting is that a host of the companies evolved are market leaders in their respective industries.
How is global banking doing?
HSBC reports its Q4 results on Monday at 08:15 GMT with analysts expecting earnings per share of $0.15, down 35% year-on-year and net revenue $15.4 billion, a rise of 1% y/y.
Earnings estimates are up 85% in the last six months. The shares traded in London are down 1% year-to-date. HSBC is probably the most global commercial bank in the world causing its earnings releases to be a barometer for global banking.
Key focus is...
- EM business is under pressure... with falling growth rates across many emerging market countries causing asset quality to deteriorate. One of the most critical areas of the bank.
- Regulatory costs are rising... and investors will focus on this on the conference call as the increasing regulatory costs for global banks such as HSBC are compressing the cost-to-income ratio.
- The outlook on Asia... is probably the most important forward-looking indicator for HSBC's stock as the bank gets its majority of earnings from this region.
Lower commodity prices are creating a challenging environment for miners. Photo: istock
The king of mining
BHP Billiton, the world's largest miner, reports its H1 earnings on Monday 21:30 GMT (after London close) with analysts expecting EPS $0.91, down 38% y/y, and sales of $30.5bn, down 10% y/y. Analysts have continuously revised their EPS estimates down, by 24% in the last six months. The shares in London are up 13.5% y-t-d.
Key focus is...
- How much has the Iron Ore division suffered on lower prices... and more specifically what is the outlook and expected capex levels.
- Petroleum outlook is going to be critical... given the weak oil prices and reduction in rig count across the board in the industry.
- Conference call more important than numbers... as investors are nervous about the outlook, so how management addresses challenges of lower commodity prices and how they perceive the near-term future is going to be critical for the stock price.
It's bull time in US home improvement
Home Depot reports Q4 earnings on Tuesday (before market) with analysts expecting EPS of $0.89, up 22% y/y, and sales of $18.7bn, a 6% y/y increase driven by the improving home net equity, higher house prices and stronger US economy. The shares are up 6% y-t-d.
Key focus is...
- Sales growth is a key metric... as the current valuation is discounting high growth in the coming years. With the current outlook for the US economy we are positive that Home Depot will deliver on sales.
- EBITDA margins have significantly expanded... reaching 14.5% in latest quarter against 13.6% in the boom year 2006 and only 8.8% in 2008. The outlook for operating margins is going to be key for investors as it has been one of the drivers behind the strong trend in the share price.
Home Depot's results are likely to deliver the goods. Photo: istock
Other key industry leaders reporting earnings next week are...
- Tuesday: Comcast, Hewlett-Packard
- Wednesday: Petrobras, Royal Bank of Canada, Telefonica, AXA
- Thursday: Anheuser-Busch InBev, Toronto-Dominion, Ambev, British American Tobacco, AIA, Royal Bank of Scotland
- Friday: BASF, Airbus, Lloyds Banking Group
– Edited by Oliver Morrison
Peter Garnry is head of equities strategy at social trading leader Saxo Bank