Results of the Earnings Reporting Season: Hopes for a Bright Future

The publication of quarterly earnings reports of the world's largest companies continues. Meanwhile, the main stock market players have already reported on their financial performance. Now we can fully analyze the performance of the giants in the first half of 2022. After all, it will help us understand whether we should fear the threat of an economic recession.

A quarterly earnings report is a document released by public companies to show investors how well the company is doing. It includes things like income, net sales, and profit. By looking at quarterly reports, investors can see if the company is financially healthy and determine if they want to invest their money there.

Nevertheless, the actual financial performance of the earnings reports for the first half of 2022 was better than expected for most companies. Of course, we are not talking about record profits, but so far there are no signs of deep stagnation.

Well, let's take a look at what the largest companies in the U.S. and the world have reported in their earnings reports.

Alphabet (Google)

Earnings per share (EPS): $1.21 vs. $1.28 expected Revenue: $69.69 billion vs. $69.9 billion expected Traffic acquisition costs (TAC): $12.21 billion vs. $12.41 billion expected

Alphabet (Google) reported weaker-than-expected earnings and revenue for the second quarter, 2022. Moreover, the figures declined in all key parameters, including revenue on YouTube, advertising sales on Google and the cost of purchasing traffic.

Alphabet's (Google) fiscal 2022 Q3 and Q4 were successful, as revenue and earnings were up nearly 30% in those periods. This was due to increased consumer activity and recovering markets. However, since the beginning of 2022, the company has been struggling amid geopolitical tensions and economic instability.

In general, representatives of the company expect that the current difficulties will last at least until the end of 2022

Microsoft

• Earnings per share (EPS): $2.23 vs. $2.29 as expected
• Revenue: $51.87 billion, vs. $52.44 billion as expected

Microsoft ️ turned in the slowest revenue growth since 2020, at 12% year over year in the quarter, which ended on June 30, according to a statement. The company's earnings per share fell short of consensus for the first time since 2016, with net income rising 2% to $16.74 billion.

And for the new 2023 fiscal year, the company reiterated its forecast from three months ago, despite the economic climate.

"We continue to expect double-digit revenue and operating income growth in constant currency and U.S. dollars," Amy Hood, Microsoft's finance chief, said on a conference call with analysts.

Coca-Cola

Earnings per share (EPS): $0.70 vs. $0.67 as expected Revenue: $11.3 billion versus $10.56 billion expected

Coca-Cola reported quarterly earnings that topped expectations as the beverage giant's sales at restaurants, theaters, and other venues recovered from the pandemic.

The Atlanta-based maker of Sprite, Dasani, and Minute Maid said it now expects organic revenue growth of 12% to 13% for the full year, up from its previous guidance of 7% to 8%. But it noted that commodity price inflation is expected to be steeper than previously forecast, and stuck by its outlook for comparable earnings per share to grow 5% to 6% from a year ago.

Unilever PLC

• Earnings per share (EPS): $1.37 vs. $1.37 as expected
• Revenue: $16.01 billion, vs. $16.14 billion as expected

Unilever reported, on Tuesday their second-quarter earnings that beat analysts' forecasts and revenue that topped expectations. The company announced earnings per share of $1.37 on revenue of $16.01B.

At the same time, Unilever said it's still pushing up prices as it faces the biggest cost surge in decades, with "truly unprecedented" inflation hitting many of its key markets. According to the representative of the company, it should help cope with the loss of some markets and the decline in purchasing power.

Meta

• Earnings per share (EPS): $2.46 vs. $2.59 expected
• Revenue: $28.82 billion vs. $28.94 billion expected
• Average Revenue per User (ARPU): $9.82 vs. $9.83 expected

Right after the release of Meta's Q2 financials, it was reported that the company had an unexpectedly rocky quarter with their own earnings. The result was a revenue decrease of 1% and some severe lower-than-expected figures. The overall income for the parent company, Meta, fell 36% to $6.7 billion. The Reality Labs division responsible for building Mark Zuckerberg's metaverse dreams lost $2.8 billion in the quarter.

Mark Zuckerberg's team is trying to increase ad sales and improve the functionality of its entertainment products. However, according to the billionaire, this takes time. Since most of the innovations are based on artificial intelligence and other IT technologies.

Boeing

• Earnings per share (EPS): - $0.37
• Revenue: $16.7 billion

The Boeing Company ✈️ reported second-quarter revenue of $16.7 billion and core loss per share (non-GAAP) of $0.37, driven by lower defense volume and unfavorable performance, partially offset by higher commercial volume.

"We made important progress across key programs in the second quarter and are building momentum in our turnaround. As we begin to hit key milestones, we were able to generate positive operating cash flow this quarter and remain on track to achieve positive free cash flow for 2022. While we are making meaningful progress, we have more work ahead. We will stay focused on safety, quality and transparency, as we drive stability, improve performance, and continue to invest in our future." said Dave Calhoun, Boeing President and Chief Executive Officer.

Apple

• Earnings per share (EPS): $1.20 vs. $1.16 estimated
• Revenue: $83 billion vs. $82.81 billion estimated
• Gross margin: 43.26% vs. 42.61% estimated

Overall, Apple's financial results for the past period were positive. Against this backdrop, Apple shares rose more than 3%. However, shareholders and other stock market participants are concerned about too slow growth. However, in conditions of economic instability, the growth of income is a good result and even a kind of achievement.

Nevertheless, Apple had not provided any guidance for Q4 2022, citing ongoing supply chain issues and continued disruptions caused by the COVID-19 pandemic. In fact, the company had even warned that supply constraints would cost it somewhere in the range of $4 billion to $8 billion in revenue for the quarter.

Analysts expected the company to give fourth-quarter guidance of $1.31 in earnings per share and nearly $90 billion in sales. But that didn't happen.

Pfizer

• Earnings per share (EPS): $2.04 vs $1.78 expected
• Revenue: $27.7 billion vs. $25.7 billion

Pfizer's second-quarter revenue and profit beat Wall Street expectations, driven by sales of its COVID-19 vaccine and its antiviral treatment Paxlovid.

So, Pfizer booked $27.7 billion in revenue, a 47% increase over the same period last year and its largest quarterly sales on record. The pharmaceutical company reported $9.9 billion in net income, a 78% increase over the second quarter of 2021.

Procter & Gamble

• Earnings per share (EPS): $1.21 adjusted vs. $1.22 expected
• Revenue: $19.52 billion vs. $19.4 billion expected

Procter & Gamble reported mixed quarterly results as the consumer products giant faced rising commodity costs and warned it expects such headwinds to persist in its fiscal 2023.

The Cincinnati-based maker of products including Pampers, Pantene and Tide said higher pricing during its fiscal fourth quarter offset a slip in sales volume, which it attributed primarily to COVID-19 pandemic-related lockdowns in China and reduced operations in Russia.

Chevron

• Earnings per share (EPS): $5.82 vs. $5.10 estimated
• Revenue: $68.76 billion vs. $59.29 billion estimated

Chevron posted record profits during the second quarter of 2022 as high commodity prices boosted operations, and as the oil giants kept spending in check.

The company's results beat analysts' estimates on both the top and bottom lines. Chevron earned $5.82 per share excluding items on $68.76 billion in revenue. Analysts were expecting the company to earn $5.10 per share on $59.29 billion in revenue.

Analysts predict that companies such as Chevron will continue to increase profits amid rising energy costs and global shortages.

Exxon

• Earnings per share (EPS): $4.14 vs. $3.74 estimated
• Revenue: $115.68 billion vs. $132.7 billion estimated

Exxon beat estimates, earning $4.14 per share excluding items, versus the $3.74 per share expected. But the company's revenue, at $115.68 billion, missed the $132.7 billion analysts were expecting.

The earnings come as energy stocks have faltered in recent months. Recession fears - and what that means for oil and petroleum-product demand - have weighed on the group. The energy sector hit a multi-year high in June.

As in the case of Chevron, this trend may continue against the backdrop of rising global energy costs.

Summary

The actual financial performance of the earnings reports for the first half of 2022 was better than expected for most companies. The best financial results for Q2-3 of 2022 came from companies in the energy sector, such as Chevron and Exxon. Disappointing financial results from IT giants like Meta and Microsoft. Overall, stock market participants remain cautiously optimistic about the second half of 2022.

Important Notice: Any news, opinions, research, analyses, prices or other information contained in this article are provided as general market commentary and do not constitute investment advice. The market commentary has not been prepared in accordance with legal requirements designed to promote the independence of investment research, and therefore, it is not subject to any prohibition on dealing ahead of dissemination. Past performance is not an indication of possible future performance. Any action you take upon the information in this article is strictly at your own risk, and we will not be liable for any losses and damages in connection with the use of this article.

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