January 2023 Earnings Roundup – The Outlook For McDonald’s, Spotify, GM, Exxon And UPS Heading Into 2023

Key takeaways

• Several companies are providing mixed results for future guidance as earnings season ramps up
• Interest rates, inflation, supply chain and other factors continue to be ongoing issues for companies
• Consumer spending last quarter was still strong, but some companies see weaker demand moving forward

January was a blockbuster month for earning reports as multiple companies shared their results from Q4 of 2022. Investors are looking for guidance for the upcoming year to make decisions about their prospective investments.

Here’s a look at what to expect from several popular companies in 2023.

Download Q.ai today for access to AI-powered investment strategies.

What is an earnings report?

Every three months, public companies will file their most recent performance reports. These include income statements, the balance sheet and the cash flow statement. An overview of sales, expenses, risks and future guidance is also included.

At the start of the quarter, the overall market can be moved as large-cap stocks will report in the first few weeks. Investors can evaluate all the public information to determine if they need to adjust their investments.

McDonald’s earnings report

The numbers:

• Earnings per share: $2.59 vs. $2.45 expected
• Revenue: $5.93 billion vs. $5.68 billion expected

What happened: McDonald’s reported an uptick in customers, which helped the company beat analyst expectations. The fact that consumer spending has decreased actually worked in McDonald’s favor since people are starting to avoid full-service restaurants in exchange for fast-food options.

Internationally the company reported a same-store sales increase of 12.6% due to strong performance in France, the United Kingdom and Germany. In other countries with licensed developmental markets, specifically Japan and Brazil, same-store sales climbed by 16.5%.

Outlook: CEO Kempczinski said the company expects a “mild to moderate” recession in the United States. It also anticipates a “deeper and longer” downturn in Europe. Fortunately, growth should still be ongoing, as evidenced by the company’s forecast that 1,900 new restaurant locations will open in 2023.

Spotify earnings report

The numbers:

• Loss per share: $1.52 vs. $1.38 expected
• Revenue: $3.43 billion vs. $3.42 expected

What happened: The popular music streaming app beat revenue expectations and witnessed robust user growth. Spotify reported a 20% year-over-year increase to 489 million monthly active users for the quarter. They reached a company record high of net additions to monthly active users at 33 million, and paid subscribers rates went up 14% from a year ago to 205 million.

However, the company announced it would cut 6% of employees earlier this year. In addition, the company will tighten spending to become more efficient. Chief Executive Daniel Ek acknowledged that he had been “too ambitious in investing ahead of our revenue growth” as the company contends with a challenging economic climate.

Outlook: Moving forward, the guidance is positive for Spotify as they expect gross margins to improve in 2023. Management projects the number of listeners will reach 500 million next quarter. Furthermore, the company sees growth potential in podcasting and will continue to invest in advertising.

General Motors (GM) earnings report

The nmbers:

• Adjusted earnings per share: $2.12 vs. $1.69 expected
• Revenue: $43.11 billion vs. $40.65 billion expected

What Happened: General Motors surprised many investors and analysts as they crushed expectations across the board. The company is still showing interest in electric vehicles and plans to invest $650 million in lithium production company Lithium Americas.

This investment contract gives GM exclusive rights to the first phase of lithium production plus the right of first refusal on the second phase of production in the Thacker Pass mine in Nevada. It is reported that the mine will provide enough materials for GM to create one million electric vehicles annually.

Surprisingly, GM CEO Paul Jacobson will not implement price cuts on vehicles despite Tesla and Ford’s lower pricing. He believes GM’s vehicles are positioned well in terms of pricing as they currently start in the mid-$20,000s.

Outlook: For 2023, the company expects net income to be between $8.7 billion and $10.1 billion and predicts earnings per share between $6 and $7. In other guidance, Jacobson is not anticipating any layoffs, but the company does expect workforce reductions resulting from attrition. GM will also begin implementing a cost-cutting plan to save the company $2 billion.

ExxonMobil earnings report

The Numbers:

• Earnings per share: $3.40 vs. $3.29 expected
• Revenue: $95.43 billion vs. $94.67 expected

What Happened: Exxon is among the world’s largest gas and oil companies poised to report annual profits. It recently announced that it would reward shareholders with higher dividends, and some analysts think share buybacks might happen.

However, investors should be mindful that the oil industry isn’t stable and can be volatile. For Exxon, the war in Ukraine and government influence are the most prominent factors potentially impacting profitability.

Outlook: Exxon is among the world’s largest gas and oil companies that are poised to report record annual profits. ExxonMobil spokesperson Erin McGrath explained that higher energy prices are “largely as a result of a supply-demand imbalance.” This imbalance is expected to continue for the time being.

UPS earnings report

The Numbers:

• Adjusted earnings per share: $3.62 vs. $3.59
• Total revenue: $27.03 billion vs. $28.09 billion

What Happened: UPS investors were undoubtedly pleased to hear that the package delivery giant is raising the dividend payout by 6.6% to $1.62 a share and set a $5 billion share repurchase program. The new annual dividend yield is now 3.66% compared to FedEx’s dividend yield of 2.50%.

While Q4 profits were topped, revenue expectations were missed. Factors that affected UPS include rising interest rates, high inflation and other macroeconomic factors. The volume inside UPS warehouses experienced reductions, and revenue from international shipping decreased by 8%.

Outlook: In 2023, UPS expects revenue to be between $97.0 billion and $99.4 billion. This outlook is lower than the company’s 2022 result. Carol Tome, UPS’ CEO, anticipates 2023 will be “cloudy, at best” for the company,

The bottom line

Earnings season will continue amid market volatility, and investors should stay informed if they want to avoid incurring significant losses. To safeguard your money, consider rebalancing and diversifying your portfolios.

Q.ai can help identify trends and predict market changes, ultimately helping investors manage risk and maximize returns. The artificial intelligence platform will rebalance your investments weekly. You can even take advantage of Portfolio Protection to avoid significant losses during these uncertain economic times.

Download Q.ai today for access to AI-powered investment strategies.