Market spotlight on today’s earnings: Netflix, Johnson & Johnson, and Procter & Gamble take center stage

In a bustling week for financial markets, seventy-six S&P 500-listed companies are gearing up to unveil their fourth-quarter and full-year earnings, expanding the reach of the ongoing earnings season. Among the heavyweights contributing to this wave of financial disclosures are industry giants such as Intel, Microsoft, Tesla, Visa, Amex, Netflix, GE, 3M, AT&T, and United Airlines. Despite only a modest 10% of companies having reported thus far, a common sentiment of disappointment lingers, particularly in relation to revenue figures. Investors are eagerly awaiting earnings reports, particularly from Netflix, and expectations are generally positive. 

Netflix: A Streaming Giant’s Moment in the Limelight 

Streaming powerhouse Netflix, a standout in the FAANG group, is poised to unveil its fourth-quarter earnings after the market’s closing bell on Tuesday. The streaming giant witnessed an impressive 30% surge in its stock price during the final quarter of 2023. Analysts are buoyant about Netflix’s growth potential, with average earnings estimate of $2.22 per share for Q4, a substantial uptick from the 12 cents per share reported in the corresponding period last year. Revenue is anticipated to showcase an 11% year-over-year increase, reaching a formidable $8.7 billion. 

“The addressable market for streaming remains compelling, and Netflix’s global leadership and content budget remain key advantages in capturing share of overall market growth,” said Benjamin Swinburne, Equity Analyst at Morgan Stanley. 

“We continue to see Netflix as a FCF generative business, though long-term FCF margins will be determined by the ability to drive higher scale on fixed operating costs.” 

Johnson & Johnson: A Healthcare Titan’s Financial Diagnosis 

Healthcare behemoth Johnson & Johnson is slated to disclose its fourth-quarter results ahead of Tuesday’s market opening. Expectations are set for the company to post net income of $4.37 billion, signaling an increase from the $3.52 billion reported a year earlier. Revenue projections, however, indicate a decline to $21.02 billion from $23.71 billion in the same period the previous year. Excluding one-time items, earnings are forecasted to come in at $2.28 per share. 

Procter & Gamble: A Consumer Product Giant’s Financial Tale 

Procter & Gamble, known for its diverse range of consumer products, is set to reveal its second-quarter earnings on Tuesday. Analysts are eyeing an adjusted earnings per share (EPS) of $1.70, reflecting a commendable 7% increase from the $1.59 reported in the corresponding quarter last year. Revenue projections stand at $21.48 billion, indicating a 3.4% year-over-year rise. Procter & Gamble’s financial track record has been commendable, consistently meeting or surpassing revenue estimates in the past 8 quarters and achieving the same feat with EPS in 7 of those quarters. 

“We expect P&G to post in-line F2Q results. Incremental pressures from China with an uncertain timeline for recovery lower our Beauty outlook, despite continued US strength. Another Gillette write-down appears incidental but may speak to a challenging volume growth outlook for shaving,” noted Kaumil Gajrawala, Equity Analyst at Jefferies. 

“Still, we think Home Care and Health Care momentum, consistent reinvestment, and margin recovery deliver durable EPS growth. Maintain BUY, $175 price target.”