Following an increase in record highs last week, the stock market will be put to the test as US companies begin to report earnings for the fourth quarter this week.
Profit growth should justify the sky-high premium that the market has reached, given the explosive rally of the past year. Analysts expect on a large scale that the majority of companies will achieve profit expectations.
Another important event that could influence the direction of the markets: the US and China sign phase one of the trade agreement. Investors are eagerly awaiting the details of the deal that could clarify its implications for some sectors.
In a week full of profit reports, there are in particular three mega stocks, the results of which could impress:
1. JPMorgan Chase
JPMorgan Chase & Co (NYSE :), the powerful commercial and investment bank of Wall Street, is publishing its Q4 earnings on Tuesday. Analysts expect an average $ 2.35 profit on sales of $ 27.87 billion.
Driven by strong credit growth and robust activities in the lender's flagship, 2019 is a healthy year for JPMorgan. In the third quarter, the bank recorded the largest share in trading in fixed-income securities in almost three years and was also surprised by a jump in investment banking fees.
JPMorgan Chase weekly ticket
This earnings momentum has well supported JPM shares this year. At the beginning of this month, JPM shares reached a record high of $ 141.10. They have risen by more than 35% in the past year and close to $ 136.07 on Friday after a 1% drop.
Although a low interest rate environment may not help the lender in the future, it may encourage the expansion of loans and help JPM increase lending. That's what JPM & # 39; s Chief Executive Officer Jamie Dimon noted last year when he told analysts that the outlook for credit in the short term is relatively bright.
2. Delta Air Lines
Delta Air Lines (NYSE 🙂 will report earnings in the fourth quarter Tuesday before the market opens. Analysts expect an average of $ 1.34 per share on sales of $ 11.34 billion.
Delta led all US airlines to generate higher net revenues, giving its CEO, Ed Bastian, huge ammo to expand. In September, Delta agreed to pay $ 1.9 billion for a 20% stake in LATAM Airlines Group (NYSE :), the largest airline in Latin America.
At a December investor event, Delta announced it expects an adjusted earnings of $ 6.75 to $ 7.75 per share for 2020, compared to an average analyst estimate of $ 7.06 over the continuing high travel demand. grows 4-6% and generates $ 4 billion in free cash flow.
Delta Airlines weekly chart
The courier also maintained his outlook for 2-3% growth in non-fuel costs for each flown seat, a measure of efficiency. But this positive tailwind has so far failed to captivate investors. Delta's share has barely risen in the last six months, the result of global concerns about economic growth and trade uncertainty. Shares closed at $ 59.24 on Friday and rose 0.5% on the day.
3. Schlumberger
Schlumberger (NYSE 🙂 – & # 39; the world's largest provider of oil services – will report this Friday before the market opens. Analysts expect an average of $ 0.37 per share on sales of $ 8.17 billion.
Schlumberger's shares, which are active in more than 120 countries and provide the most extensive range of products and services in the industry, are experiencing a dramatic recovery that began in early October when the company saw a revival in international business. The stock closed at $ 39.83 on Friday, an increase of around 30% in the past three months.
Schlumberger Week card
Schlumberger generates most of its income from business outside the US and Canada. The giant in oilfield services predicts single-digit growth for 2019, with explorers looking to increase spending by as much as 8%. The profit potential for Schlumberger international is about four times as large as that of its competitors, given its larger market share and operating margin.
