Earnings Report Recap

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Here’s a recap of six companies that reported earnings this past month. These companies are stocks that are held within Incline Wealth Advisor’s equity portfolio.  

The Good

Microsoft (MSFT) missed earnings expectations but the stock rose 5% thanks to a 40% revenue growth in their cloud services. Foreign Exchange rates continue to pull down their revenue as well as slower PC sales. Microsoft expects a double-digit revenue growth next quarter. The earnings per share fell short of consensus for the first time since 2016.

Apple (AAPL) reported fiscal third-quarter earnings on Thursday that beat Wall Street expectations for sales and profit but showed slowing growth for the iPhone maker. Although Apple did not provide formal guidance for the next quarter, CEO Tim Cook did say they “expect revenue to accelerate in the September quarter despite seeing some pockets of softness.” Apple’s stock opened about $4 higher after their earnings report at $161.24.

Amazon (AMZN) shares climbed more than 13% in extended trading on Thursday after the company reported better-than-expected second-quarter revenue and gave an optimistic outlook. Amazon said it expects to post third-quarter revenue between $125 billion and $130 billion, representing growth of 13% to 17%. Analysts were expecting sales of $126.4 billion. The pandemic-driven expansion left the company with twice as many workers so Amazon announced a cut of 99,000 jobs in Q2. However, Amazon still employs approximately 1.5M people.  They stated strong results from their recent prime day and are excited about upcoming Prime Video events such as NFL, MLB and the Lord of the Rings. 

Alphabet, AKA Google, (GOOG) reported weaker-than-expected earnings and revenue for the second quarter. The stock rose more than 4% in extended trading. The company reported earnings per share of $1.21 vs $1.28 expected. Currency fluctuations from a strengthening dollar knocked 3.7 percentage points off revenue growth, CFO Ruth Porat said the strength of the dollar will hit next quarter’s results even harder. Overall revenue growth increased by 13% in the quarter. One reason for weaker than expected revenue is due to companies spending less money on advertising. 

Exxon (XOM) posted record profits during the second quarter of 2022 as high commodity prices boosted operations, and as the oil giant kept spending in check. Its shares rose 4%. They reported $19.9 billion compared to $4.7 billion during the same quarter in 2021. Earnings were expected to increase $3.74 per share but beat those estimates and rose to $4.14 per share. The companies record quarter is likely to draw further ire from Washington as surging energy costs have been a key contributor to decades-high inflation. Recession fears have weighed on the entire energy sector as it is down 18% since a multi-year high in June.

The Bad

Shares of JPMorgan (JPM) fell nearly 5% to a new 52-week low after the banking giant reported their earnings in mid-July. CEO Jamie Dimon’s future outlook was not optimistic as he said high inflation, waning consumer confidence, high interest rates, and the war in Ukraine, are among the hurdles that the global economy will be facing for sometime down the road. JPMorgan temporarily suspended its share repurchases to help reach regulatory capital requirements. Dimon stated his frustration withe the Federal Reserve and the stress test they run on banks. Dimon was called out by one of the research analysts that quoted Dimon stating that he is predicting an “economic hurricane.” Dimon, clearly frustrated, responded that he will continue to run his business the same way regardless of what economic cycle we are in. He went on to say that they still need to continue to invest and grow the company. He still believes that in 10 years the company will be larger than it is today and they will have more clients than they do now. 

Procter & Gamble (PG) reported earnings that came in just shy of Wall Street expectations: $1.21 per share vs. $1.22 expected. However, their revenue beat expectations as higher prices offset a slip in sales volume. Revenue was $19.52 billion vs. an expected revenue of $19.4 billion. Procter & Gamble is one of the companies feeling the effects of rising commodity costs. They expect these headwinds to persist in the next year. Shares of the company closed down about 6%, closing at $138.91.

To read more about investing during these uncertain times, check out this article: https://incline-wealth.com/2022/03/investing-during-uncertain-times/

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The information contained herein is intended to be used for educational purposes only and is not exhaustive. Diversification and/or any strategy that may be discussed does not guarantee against investment losses but are intended to help manage risk and return. If applicable, historical discussions and/or opinions are not predictive of future events. The content is presented in good faith and has been drawn from sources believed to be reliable. The content is not intended to be legal, tax or financial advice. Please consult a legal, tax or financial professional for information specific to your individual situation.

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