The Dow Jones Industrial Average (DJINDICES: ^DJI) is up a tiny 18 points to 35,079 as of 1:38 p.m. EDT on July 26, ahead of a huge earnings week for the index. According to a quick count, it looks like 10 Dow Jones component companies are set to report earnings this week, headlined by Apple (NASDAQ: AAPL), Microsoft (NASDAQ: MSFT), and Visa (NYSE: V) after market close on July 27.
Let’s take a closer look at what investors should expect, as well as what other Dow companies report this week, and when.
What to expect from Apple, Microsoft, and Visa
Image source: Getty Images.
Apple: iPhone, services, and risks to its App Store dominance
Apple’s upcoming earnings are for the company’s fiscal third quarter, and after a blowout second-quarter report back in May, expectations are high. Investors are looking for Apple to grow revenue 22% to almost $73 billion, and for earnings to surge 56% to $1 per share. Where should investors be paying the most attention? Three things stand out:
- iPhone sales, which drive most of Apple’s revenue and profits (and are the portal for its high-margin services).
- Services, which Apple has made a major focus in recent years.
- Any updates on ongoing antitrust and anti-competitive litigation.
The first two are obvious. The iPhone is not just Apple’s most important, and most profitable, product, it’s also the onramp for a lot of Apple’s services, whether revenue cuts it takes from third-party apps, or from its growing collection of in-house services including Apple Fitness+ and Apple TV. The third one is a little harder, and frankly it’s unlikely management will say much at all. But anything we can glean regarding ongoing legal and regulatory challenges is worth paying attention to.
Microsoft: Still in growth mode
Few turnarounds in recent years have been as impressive as Microsoft’s. CEO Satya Nadella has done an incredible job shifting the company’s focus and immense resources to the cloud and a software-as-a-service (SaaS) model, and away from its legacy of selling software to PC makers and enterprise customers, and then upgrading them to the new versions every few years.
Last quarter (its third fiscal quarter) Microsoft reported 19% revenue growth, while earnings per share surged 45%. All three of Microsoft’s business segments grew sales at least 15%, but it was the intelligent cloud segment that performed the best. Revenue was up 23% to $15.1 billion, making this Microsoft’s largest business unit, with Azure — its hugely popular cloud services offering — delivering 50% revenue growth last quarter.
For the quarter it will report on July 27, Microsoft expects accelerated revenue growth across all three segments, but especially cloud, with revenue guidance of $16.3 billion at the midpoint. That’s more than $1 billion higher than in the prior quarter.
Visa: Reopening trade should help results bounce back
The credit card and electronics payment processing giant is another company with high expectations ahead of earnings. Last week, shares of Visa surged after competitor American Express reported 33% revenue growth, reversed almost $900 million in credit reserves, and said card member spending in June “exceeded pre-pandemic levels” in its quarterly earnings release.
The company didn’t release a detailed future outlook, due to continued uncertainty in the global economy, but CFO Vasant Prabhu responded to an analyst question on the Visa earnings call that “high teens is our best estimate” on expected revenue growth. Investor expectations are high for Visa’s earnings. Last year it earned $1.07 per share on an adjusted basis, while the expectation is $1.34 per share this quarter, about 25% growth.
These Dow Stocks report later this week
It’s indeed a busy week to come. Here are the other Dow Jones stocks scheduled to report earnings later this week, and the date they report and will hold their earnings call:
- 3M, July 27, before market open.
- Boeing, July 28, before market open.
- McDonald’s, July 28, before market open.
- Merck, July 29, before market open.
- Caterpillar, July 30, before market open.
- Chevron, July 30, before market open.
- Procter & Gamble, July 30, before market open.
Stay tuned for a closer look once earnings are out.
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American Express is an advertising partner of The Ascent, a Motley Fool company. Teresa Kersten, an employee of LinkedIn, a Microsoft subsidiary, is a member of The Motley Fool’s board of directors. Jason Hall owns shares of American Express and Visa. The Motley Fool owns shares of and recommends Apple, Microsoft, and Visa. The Motley Fool recommends 3M and recommends the following options: long March 2023 $120 calls on Apple and short March 2023 $130 calls on Apple. The Motley Fool has a disclosure policy.
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