Article / 01 July 2016 at 14:30 GMT

Earnings Watch: Samsung in the spotlight

Head of Equity Strategy / Saxo Bank
  • Next week sees Samsung, PepsiCo earnings in focus
  • Samsung poised to outperform on smartphone saturation
  • PepsiCo shares appear expensive considering sentiment
Samsung's US HQ in San Jose
We expect Samsung shares to outperform following 
next week's earnings release. Photo: iStock 

By Peter Garnry

Another off-earnings season week is starting Monday, but the coming week will nevertheless be big on releases. Samsung reports its Q2 figures on Wednesday with analysts expecting EPS at 37,309, down 13.7% from same period last year despite revenue expected to be up 4.9%.

Source: Saxo Bank, Bloomberg

Samsung shares listed in London are up 20% year-to-date and have lately accelerated on news that the mobile segment (46% of revenue in FY15) will beat estimates driven by strong sales of the new S7 Galaxy. 

Channel checks in Asia seem to indicate that demand has overwhelmed Samsung and production is behind current demand while the opposite has been the case for Apple due to their much higher price point. 

We believe the current estimated revenue growth in FY16 of 2.4% y/y is way too pessimistic and that Samsung will widely beat this negative sentiment as the smartphone market has entered its saturation phase with more focus on price than premium features.
Regular readers will know that we have a long Samsung/short Apple pair trade in our equity portfolio that is currently up 10% since inception on May 19.

Samsung weekly chart since 2011:

Create your own charts with SaxoTraderGO click here to learn more

Source: Saxo Bank 

Another interesting company reporting earnings next is PepsiCo as it will give a good insight into consumer demand in selected emerging market countries such as Mexico, Russia and Brazil. 

Revenue growth went negative (minus 5.4%) in FY15 driven by the weaker USD, but the trend was already underway. PepsiCo is suffering from the same health trend as Coca-Cola and in our opinion, investors are overpaying for PepsiCo’s stock at 22.5x forward EPS.

PepsiCo weekly chart since 2011:
Source: Saxo Bank 

The full table with information on next week’s earnings releases can be found in the attached PDF.

— Edited by Michael McKenna

Peter Garnry is head of equity strategy at Saxo Bank 
Alfa1956 Alfa1956
"can be found in the attached PDF" ??
Where, exactly?
KaranKK KaranKK
Hi Peter,
In yesterday's squawk, you mentioned about sending email on the stock portfolio.
How can we enroll on your mailing list ?
Peter Garnry Peter Garnry
You have to call your account manager. @Alfa1956 the editors have forgot to attach the PDF. The email sent directly to clients contained the PDF. Sorry for the inconvience.


The Saxo Bank Group entities each provide execution-only service and access to permitting a person to view and/or use content available on or via the website is not intended to and does not change or expand on this. Such access and use are at all times subject to (i) The Terms of Use; (ii) Full Disclaimer; (iii) The Risk Warning; (iv) the Rules of Engagement and (v) Notices applying to and/or its content in addition (where relevant) to the terms governing the use of hyperlinks on the website of a member of the Saxo Bank Group by which access to is gained. Such content is therefore provided as no more than information. In particular no advice is intended to be provided or to be relied on as provided nor endorsed by any Saxo Bank Group entity; nor is it to be construed as solicitation or an incentive provided to subscribe for or sell or purchase any financial instrument. All trading or investments you make must be pursuant to your own unprompted and informed self-directed decision. As such no Saxo Bank Group entity will have or be liable for any losses that you may sustain as a result of any investment decision made in reliance on information which is available on or as a result of the use of the Orders given and trades effected are deemed intended to be given or effected for the account of the customer with the Saxo Bank Group entity operating in the jurisdiction in which the customer resides and/or with whom the customer opened and maintains his/her trading account. When trading through your contracting Saxo Bank Group entity will be the counterparty to any trading entered into by you. does not contain (and should not be construed as containing) financial, investment, tax or trading advice or advice of any sort offered, recommended or endorsed by Saxo Bank Group and should not be construed as a record of ourtrading prices, or as an offer, incentive or solicitation for the subscription, sale or purchase in any financial instrument. To the extent that any content is construed as investment research, you must note and accept that the content was not intended to and has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such, would be considered as a marketing communication under relevant laws. Please read our disclaimers:
- Notification on Non-Independent Invetment Research
- Full disclaimer
- 沪ICP备13028953号-1

Check your inbox for a mail from us to fully activate your profile. No mail? Have us re-send your verification mail