Stock market: the earnings of Apple, Mastercard, etc.

The earnings season continues in the United States. This means stocks of the largest American companies will likely make big moves. You can trade these stocks with FBS (learn more) and make money!

Tuesday, July 30

Apple

EPS forecast: $2.09

Revenue forecast: $53.3B

The majority of analysts think that Apple’s financial results will be around the midpoint of its own guidance. iPhone sales are expected to be flat from a year ago. The biggest problem is that consumers don’t see the need to upgrade to new smartphones as they are largely the same as the previous models. The company also may predict a significant year-on-year fall in revenue for the month ahead. 

The picture looks much better in Apple’s services business that’s performing really well: the revenue of the segment may have increased by about 20% during the reported quarter. At the same time, the future of Apple’s TV and gaming-subscription service introduced by the company earlier this year is not really clear. Finally, the firm faces an antitrust investigation and some major lawsuits that obviously represent negative risks.   

The stock is testing levels above the resistance line connecting 2018 and 2019 highs. If it fixes above this line, it will be a positive development. The next levels to watch on the upside are 215.00 and 220.00. Support is at 207.00, 205.00, and 202.50. All in all, the stock has a chance to continue grinding higher, but it’s hard to believe that the advance can be big and fast. 

Mastercard

EPS forecast: $1.82

Revenue forecast: $4.08B

The opinion about Mastercard’s upcoming earnings report is improving as analysts upgrade their views. According to the consensus forecast, the company’s earnings have increased by 9.64%, while revenues have risen by 11.6% y/y. The picture is expected to be like in the previous quarter when Mastercard managed to beat expectations. The key drivers of the firm’s good performance are a continued increase in retail spending and digital transactions. The actions of Mastercard’s management look very proactive: the company is enhancing services provided to small and medium-sized businesses and acquiring various companies and services. Such a policy will likely support the overall positive trend in the stock’s price. 

The stock has been trading within the long-term uptrend. The P/E above 47 is rather high. If the price corrects down and moves below 280.00 on the release, watch the support at 275.00 and 270.00. The next upside target is at 290.00.

Wednesday, July 31

General Electric

EPS forecast: $0.12

Revenue forecast: $28.48B

Things weren’t very bright when General Electric the last time reported earnings: total profits were fell by 11.3% y/y. The company is having trouble with its power division, while aviation and oil/gas seem to be doing fine. This time, EPS are expected to plunge by 37%.

At the same time, analysts are slowly becoming more hopeful: they acknowledge the fact that GE has started investing in clean energy - the thing has the potential to reignite the company’s profitability. In particular, it places great hopes in the wind turbine business. All in all, everything will depend on whether the firm manages to convince investors that the efforts it makes will pay off. Yet, it’s clear that the transformation will take time but any signs of progress should be taken positively by the market.

The stock is on the upside since the start of the year. However, price dynamics has been mostly sideways. Below 10.35 GE will be vulnerable for a decline to 10.15. Further support is at 9.95 and 9.55 (200-day MA). The key resistance lies at 10.70: the stock has already made three unsuccessful attempts to overcome it. The next level to watch on the upside lies at 11.00.

Thursday, August 1

General Motors

EPS forecast: $1.43

Revenue forecast: $35.98B

The earnings of General Motors have so far tended to surprise the market in a positive way. The company’s updating its best-sellers and reshuffling its model line. It also made a move to restructure operations and develop future technologies. All of these should have a positive impact on GM’s business. 

On the other hand, it’s hard to ignore the negative factors related to demand. In Q1, sales went down in North America and China due to the uncertain global economic outlook. This trend will likely continue keeping GM’s financial figures under pressure.

The stock was on the upside since the start of June and managed to rise above the previous highs of 2019 outperforming the industry. GM’s P/E of 6.49 is still lower than that of its competitors. This means that the stock has a decent chance of continuing its ascent if the EPS and revenue are good enough. Still, it has to break above 41.00 to get a chance to travel up to 42.00 and 43.70. Support is located at 40.15, 39.70, and 39.00.  

Author: FBS Analyst Team

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