With most of the earnings reports released in the past three weeks, the picture emerges that corporate America has weathered the COVID-19 pandemic pretty well.
The percentage of companies reporting actual earnings per share that came out better than expected is 83%, which is above the five-year average, according to FactSet. If 83% is the last percentage for the quarter, this is the highest percentage of companies reporting a positive EPS surprise since FactSet began tracking this metric in 2008.
Some macro indicators also support these positive undercurrents. There was a strong rebound in July and a low – two crucial factors in keeping the Federal Reserve on the sidelines for an extended period of time.
In the midst of all these positive developments, a few more high-profile company names continue to release second quarter earnings. We look at these three stocks that might respond after their earnings:
1. Berkshire Hathaway
Warren Buffett & # 39; s holding company Berkshire Hathaway (NYSE :), (NYSE 🙂 released its Q2 on Saturday. The report found that the Omaha, Nebraska-based company's operating income fell 10% in the second quarter to $ 5.51 billion, compared to $ 6.14 billion in the same period a year earlier.
The company also acquired approximately $ 10 billion from Precision Castparts, Berkshire & # 39; s largest company in its manufacturing segment. But the main highlight of this latest report was that the investment firm spent a record $ 5.1 billion buying back Berkshire & # 39; s own stock during that period.
That came when Berkshire offloaded nearly $ 13 billion in shares of other companies, including airline stocks and some financial data, in what was Buffett's best-selling quarter in more than a decade.
"Our operating business groups are preparing for reduced cash flows as a result of reduced revenues and economic activity as a result of COVID-19," Berkshire said in a regulatory filing Saturday.
"We currently believe that our liquidity and capital strength, which is extremely strong, is more than adequate."
Berkshire & # 39; s investment in public markets was up $ 34.5 billion in the quarter, led by its stake in Apple (NASDAQ :). That profit drove total net profit to $ 26.3 billion in the second quarter, from $ 14.1 billion a year ago.
Berkshire Class A and Class B shares plummeted more than 19% in the first quarter, and lagged the S&P 500 in the second quarter with declines of more than 1%. The Class B stock closed at $ 209.48 Friday
2. Lyft
San Francisco-based ride-hailing company, LYFT (NASDAQ :), will publish its Q2 report on Wednesday, August 12, after the market closes. Forecasts call for a net loss of $ 1.07 per share on sales of $ 340.26 million.
Lyft shares fell about 7% on Friday, closing at $ 30.19 after its closest rival, Uber (NASDAQ 🙂 on its Thursday night report.
The release of Uber showed that the taxi company continues to struggle amid the COVID-19 pandemic.
Lyft, which – unlike globally-focused Uber – operates only in the US and Canada, began to see signs of a slowdown in mid-March as governments advised people to take shelter on site and significantly curtail travel. The situation deteriorated rapidly in the second quarter as the virus spread and workers continued to operate from their homes.
Investors will be interested to know how LYFT's plan to cut costs evolves to contain current losses. The company's stock is down 30% this year.
3. Cisco Systems
Cisco Systems (NASDAQ 🙂 will also report its fiscal year 2020 fourth quarter earnings on Wednesday even after market close. The San Jose-based network giant is likely to report $ 0.74 per share on revenue of $ 12.04 billion, according to analyst consensus forecast.
Cisco's revenues were down 8% year-on-year, before the company's worst decline in six years, when Cisco & # 39; s business was hit by the global pandemic.
Under Chief Executive Officer, Chuck Robbins, Cisco has made a series of acquisitions to build its software and services business. Last year, Cisco agreed to acquire Acacia Communications (NASDAQ 🙂 for approximately $ 2.6 billion, obtaining chips and machines that help convert optical signals into electronic data.
These growth initiatives, coupled with the company's dominant position in the US region, where it generates most of its sales, can help the technology conglomerate exceed expectations. The stock, which closed at $ 47.43 Friday, has changed little this year.
