Earnings releases from tech companies are set to be the main focus in the coming week, but there are also a number of major companies in other sectors due to report.
Five of the ‘Magnificent Seven’ tech behemoths are scheduled to report in the week ahead — Alphabet (GOOG), Meta (META), Microsoft (MSFT), Amazon (AMZN) and Apple (AAPL).
However, they won’t be the only companies drawing focus in markets next week.
Oil majors BP and Shell's recent updates guided to weaker performance in the third quarter, so investors will be looking for more details in the full results.
Shareholders in ride-hailing Uber will also be keeping a close eye on its latest results, for any further information on reports that the company had explored a potential bid on Expedia (EXPE).
HSBC is another major bank due to report, fresh off the news that the company was overhauling its structure.
And while struggling chipmaker Intel has already warned investors of weak performance in the third quarter, markets will be watching out for any surprises to upside for the company.
Shares in BP are down by nearly a quarter over the past year, with results from previous quarters weighing on the stock.
The oil major also said it expected weaker realised refining margins in the range of $400m (￡307m) to $600m in its products segment.
In addition, BP forecast net debt would be higher at the end of the third quarter “driven primarily by the impact of weaker realized refining margins and by the rephasing of around $1bn of divestment proceeds into the fourth quarter”.
In the second quarter, BP recorded an underlying replacement cost profit of $2.8bn. Underlying replacement cost profit is the metric that BP uses as its version of net income.
Russ Mould, investment director at AJ Bell and Danni Hewson, who is the platform’s head of financial analysis, said that this headline figure is their benchmark for what to expect in the third quarter, as well as the $3.3bn that BP generated in the July-to-September period last year.
They said that investors will also be looking at the mix of profits from BP’s different business segments, before deductions including tax and finance costs are taken out, to give that overall underlying replacement cost profit figure.
In the previous quarter, BP’s oil production arm made a profit of $3.1bn, while gas generated $1.4bn and its downstream customers and products operations made $1.1bn.
Capital expenditure will be another metric in focus, with BP budgeting for $16bn in capex this year, which AJ Bell’s Mould and Hewson said represented a “big drop” from last year.
They said that the focus on the health of the company’s cash flow and balance sheet was important, as these can “facilitate cash returns to shareholders”.
Both BP and fellow oil major Shell are “rebuilding their dividends after the cuts of 2020”, they pointed out. BP has a quarterly dividend of $0.08, though this is still lower than its peak payout of $0.105.
BP announced a further $1.75bn in share repurchases for the second quarter and committed to another $3.5bn in buybacks in the second half of the year.
Shell's shares are down 6.5% on a one-year basis.
In its trading update giving a glimpse into what it expects for the third quarter, Shell said it expected indicative refining margins to fall to $5.5 a barrel, down from $7.7 in the second quarter. This would represent a 30% fall in refining margins.
In terms of headline profits, the focus for Shell is on its earnings before interest, taxes, depreciation and amortisation (or EBITDA) figure. The oil major generated adjusted EBITDA of $16.8bn in the second quarter, which was down from the previous three months. In Q3 last year, Shell posted adjusted EBITDA of $16.3bn.
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“At Shell, gas was again a bigger earner than oil production in the second quarter,” said AJ Bell’s Mould and Hewson.
On capex, Shell’s target of between $22bn and $25bn is far below its $40bn peak in 2013, they said.
While Shell didn’t provide guidance on its net debt in its recent update, this figure stood at ￡38.3bn as of the end of the second quarter, falling by $2.2bn on the previous three months.
Shell’s quarterly dividend was back up to $0.34 per share, though this was once again lower than a high of $0.47.
In its second quarter results, the oil major also announced a further $3.5bn share buyback programme for the following three months.
Shares in Uber ticked lower following reports last week that the company was eyeing a potential takeover offer for Expedia.
The Financial Times reported that Uber had "explored a possible bid" for travel website.
Uber had reportedly approached advisers in recent months, though no formal approach was said to have been made to Expedia, nor are there currently any discussions around the matter.
The ride-hailing company's CEO Dara Khosrowshahi led Expedia from 2005 to 2017 and still remains a non-executive director on the company's board.
In another interview with the Financial Times, Khosrowshahi said: “Anywhere you want to go in your city and anything that you want to get, we want to empower you to do so.”
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This signalled the CEO's aim of Uber having a broader reach, beyond its origins in ride-hailing and comes as competition in that space heats up.
On Wednesday, Tesla (TSLA) announced that it expected to roll out autonomous ride-hailing in California and Texas in 202, which weighed on the shares of Uber and rival Lyft (LYFT).
Uber's third quarter results could provide a boost to its share price, given the stock's jump after its second-quarter update in August.
The company reported 16% year-over-year revenue growth, posting $10.70bn in revenue for its second quarter against estimates of $10.58bn. Earnings per share of $0.47 also came in ahead of an expected $0.39. Uber also reported gross bookings of $40bn, up 19% year-on-year.
For the third quarter, Uber guided to gross booking of between $40.25bn and $41.75bn, which represent growth of between 18% and 23% year-on-year. Adjusted EBITDA is expected to come in at $1.58bn to $1.68bn, would equate to a year-on-year increase of 45% to 54%.
Following on from quarterly reports by three of the UK's big banks — Lloyds (LLOY.L), Barclays (BARC.L) and NatWest (NWG.L) — it is now the turn of Europe's largest lender HSBC.
This week, the bank's new CEO Georges Elhedery, unveiled an overhaul of the bank's structure, dividing it into four businesses.
In an announcement outlining the changes, HSBC said this was aimed at reducing the "duplication of processes and decision making" in the business.
Elhedery said: "The new structure will result in a simpler, more dynamic, and agile organisation as we focus on executing against our strategic priorities, which remain unchanged."
In addition, HSBC announced that it appointed Pam Kaur as group chief financial officer (CFO). Kaur, who joined HSBC in 2013 and is currently group chief risk and compliance officer, is the first woman to hold the role of CFO in the bank's 159-year history.
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The bank reported pre-tax profit of $21.56bn in the first half of year, which was stable compared with the same period last year.
Meanwhile, revenue was up 1% to $37.3bn, versus the same period in the first half of 2023.
HSBC also announced a share buyback programme of up to $3bn, which it expected to complete within three months. The bank also approved a second interim dividend of $0.10 per share.
Looking ahead to the third quarter, consensus estimates from brokers expect HSBC to report profit before tax of $7.6bn, according to figures provided by the bank.
Brokers are also anticipating net interest income, which refers to the gap between what it pays out to savers and borrowers in interest, to come in at $8.15bn for the quarter.
Shares in Intel had slid nearly 55% year-to-date, with the company facing a series of struggles this year.
In the second quarter, Intel posted second-quarter revenues of $12.8bn, down 1% year-on-year.
The company also reported an earnings per share loss of $0.38, with it anticipating a loss of $0.24 in the third quarter. Intel also forecasted revenues to be between $12.5bn and $13.5bn for the quarter.
On the back of the results, Intel CEO Pat Gelsinger outlined "significant actions to reduce" costs in the business.
As part of its goal of delivering $10bn in cost savings in 2025, Gelsinger said in a note to employees that the company would be looking to cut around 15,000 roles, or 15% of its workforce.
"Our costs are too high, our margins are too low," he said. "We need bolder actions to address both – particularly given our financial results and outlook for the second half of 2024, which is tougher than previously expected."
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In addition to reducing operational costs, Intel had also decided to suspend its dividend beginning in the third quarter.
AJ Bell's Mould and Hewson said the shares now trade their lowest level in more than decade and are no higher than where they stood in 1997. This was "when Intel was the undisputed leader in microprocessors (way ahead of AMD (AMD)) and was a key part of the Wintel (Windows-Intel) hegemony that cemented its own and Microsoft’s dominant positions in the desktop and personal computing markets," they said.
"Since then, Intel has failed to crack the smartphone market, struggled to penetrate foundry and threaten Taiwanese dominance and seen AMD start to make inroads into its market share in the field of AI, despite December 2023’s launch of the Core Ultra processor," they explained.
Going into the third quarter results, they said that given "expectations for both this quarter and the next one are already low...it may not take much to surprise on the upside".
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