Here Are the Earnings to Watch Next Week

(Bloomberg) — The specter of recession looms as policymakers continue to grapple with inflation, but Delta Air Lines and PepsiCo seem to have found a sweet spot in consumer sentiment with their pricing power, set to be on display in next week’s earnings.

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Three of the largest US lenders will also release results next week, offering a closer look at how the financial sector has fared since the regional bank turmoil sparked by the collapse of Silicon Valley Bank in March.

Though fears of a credit crisis have subsided, banks are likely to see profits pressured by having to pay more for deposits in the months ahead as this week’s surprisingly robust jobs data reinforced the argument for further Fed rate hikes.

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Click to see the highlights to watch this week from earnings reports in Europe and Asia

Monday: Helen of Troy Ltd.’s (HELE US) operating margin is expected to contract slightly in the first quarter despite restructuring to improve efficiency. Weaker discretionary spending is stalling profitability growth and the consumer-goods maker, which counts Amazon.com Inc. and Walmart Inc. among its biggest customers, is likely to see its third consecutive shrinkage in topline results. Helen of Troy reports before market open.

Tuesday: No notable earnings.

Wednesday: No notable earnings.

Thursday: Robust travel demand, strong fares and easing fuel expenses should lift Delta Air Lines Inc. (DAL US) earnings to their highest since the Covid outbreak, with earnings per share almost doubling from the same period last year. The second-quarter report, due before the market opens, should also reveal yields rising 1% from last year and 19% higher compared to the same period in 2019. Lower fuel costs are helping offset higher labor costs from its new pilot contracts, says Bloomberg Intelligence. But despite tough talk from CEO Ed Bastian, Delta faces increased risks if inflation persists and the US economy slows into 2024, BI adds.

The durability of PepsiCo Inc.’s (PEP US) portfolio of brands and the pricing power that comes from it will be on display in the company’s second-quarter earnings. Organic revenue growth is set to rise 9-10%, BI says, keeping PepsiCo ahead of its packaged-food peers. Along with the sales growth, the company should maintain its operating margin above 16% as productivity gains hold. The deployment of artificial intelligence in the conglomerate’s marketing and distribution networks could also produce further efficiency gains. Earnings are due premarket.

Friday: JPMorgan Chase & Co. (JPM US) and Wells Fargo & Co. (WFC US) are expected to report the strongest revenue growth among the large US banks as interest income offsets falling investment banking fees. After taking a conservative initial view of its interest revenue, Wells Fargo may raise its outlook even as peers cut guidance, Piper Sandler analysts say. Both banks will likely sound a more cautious note over the deteriorating outlook for office rentals, as they’re among the lenders with the largest commercial real estate portfolios in absolute size. Bloomberg consensus estimates the banks will increase provisions for bad debt by over 130% in the quarter, more than their rivals. JPMorgan and Wells Fargo report premarket.

Citigroup Inc. (C US) is one of two big lenders projected to post falling revenue, with net interest income growth expected to slow to 8%, from about 22% in the preceding two quarters. Recent job cuts will push quarterly expenses up by as much as $400 million, while trading revenue fell by a fifth as concern over the US debt ceiling weighed on client activity, Citi CFO Mark Mason has warned.
BlackRock Inc. (BLK US) and State Street Corp. (STT US) are on track to grow their earnings and assets under management for the first time since the first quarter of 2022. Investors may also be keen to hear more about BlackRock’s efforts to expand its cryptocurrency business lines, as well as the asset manager’s views on opportunities in AI. Both companies report premarket.
UnitedHealth Group Inc. (UNH US) is seen posting its slowest earnings growth in five quarters — 9% versus 19% a year ago — when it reports before market open. Although pandemic-related hospital admissions have slowed, the health insurer’s profitability is under pressure from a rise in costlier surgical volume, BI notes. UnitedHealth executives may also offer insight into the recent all-cash purchase of Amedisys Inc. for $3.3 billion, seen as part of a broader strategy to position itself in the home-based care space as the US population ages.