Earnings season is currently experiencing a flurry of activity, with a particularly notable lineup of reports on the horizon this week. Expectations are riding high for yet another period of favorable growth, with a significant highlight on the tech sector.
Of particular interest this upcoming week are the earnings reports from two esteemed members of the Mag 7 group, namely Alphabet (GOOGL) and Tesla (TSLA). So, what can we anticipate in terms of performance as we approach each of these pivotal releases? Let’s delve deeper into the estimates and crucial metrics.
Anticipating Potential Soar for Alphabet Shares
Giant entity Alphabet is set to unveil its quarterly results on Tuesday, July 23rd, following the conclusion of the trading day. The company has been displaying a streak of positive outcomes in its recent quarterly disclosures, consistently outperforming the Zacks Consensus EPS estimate by an average margin of 11% over its last four reports.
Post its most recent release, shareholders experienced a wave of optimism, igniting a surge in the stock price. Alphabet has transitioned into a promising growth phase, with a remarkable 61% increase in earnings and a 15% surge in revenue year-over-year from their last disclosure.
Market analysts have maintained a positive outlook on the company’s performance in the forthcoming quarter, as evidenced by the upward revision of the Zacks Consensus EPS estimate to $1.85, climbing nearly 6% since mid-April. This figure represents a substantial 28% growth from the comparable period of the previous year, sustaining its recent trajectory of expansion.
Image Source: Zacks Investment Research
The positive momentum for shares post the latest release was largely driven by the enthusiasm surrounding Cloud and AI, themes that are likely to command considerable attention once again. Alphabet’s Cloud performance has surpassed expectations in recent disclosures, allaying concerns of an imminent sluggishness in the sector.
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Despite the noteworthy uptrend in share price, Alphabet’s current forward 12-month earnings multiple of 21.8X remains relatively moderate, staying below the five-year median of 22.4X. The present PEG ratio standing at 1.2X indicates a fair valuation in light of the forecasted growth.
The stock currently boasts a Style Score of ‘C’ for Value.
Deciphering the Importance of Tesla’s Margins
Following the disclosure of Tesla’s production and delivery figures, the company’s stock witnessed a surge. Tesla’s Q2 deliveries hit 444,000 units, with 411,000 electric vehicles produced. While investors were pleased with these results, it’s worth noting that deliveries experienced a slight 4.1% decline compared to the previous year.
The company’s forthcoming quarterly release, anticipated on Tuesday, July 23rd, is likely to be heavily scrutinized with regard to margins. Recent pressures on margins have been a focal point for investors and have contributed to the cautious start for the stock in 2024.
It is pertinent to mention that the subsequent chart showcases data over a trailing twelve-month period.
Image Source: Zacks Investment Research
While there has been an overall decline in earnings expectations since the end of April, recent positive revisions in early July have injected optimism ahead of the disclosure. The projected earnings of $0.62 per share indicate a 14% improvement from the corresponding period last year, steering the EV juggernaut back towards a positive trajectory.
Image Source: Zacks Investment Research
Despite a sluggish start earlier this year, Tesla’s shares have witnessed an impressive 70% surge over the past three months, showcasing exceptional outperformance and optimistic sentiment. A positive quarterly announcement could further propel the stock upwards, especially if the company delivers encouraging remarks about its margins.
Closing Thoughts
With earnings season gaining momentum, this week is poised to be particularly eventful as several notable companies prepare to announce their results, including Mag 7 members Alphabet (GOOGL) and Tesla (TSLA).
Investors eyeing Alphabet will eagerly anticipate insights on the cloud computing and AI landscape, while Tesla investors will be closely monitoring margins and any disclosures on future plans regarding autonomous driving.
Both companies are scheduled to release their earnings after the close of the market on July 23rd.