January is known as a bit of a turbulent month, financially speaking, with many of the major companies releasing earnings for Q4 from the previous year – and 2023 is not expected to be any different. These figures might have a noticeable impact on stock prices, which is why you should approach them well-prepared, including being aware of the dates when numbers are out.
During 2022, global interest rates rose faster than expected, meaning higher borrowing costs. The ability of publicly-listed companies to generate revenues, positive cash flow, and stable EPS numbers is vital for any one of those companies that wishes to keep current valuations stable.
JP Morgan
As always, the earnings season starts with financials. Since JP Morgan remains the largest commercial bank in the USA to date, traders will want to carefully watch the numbers, as well as what the bank expects for 2023. Larger provisions for credit-related losses can mean that the banking industry might have to face the issue of bankruptcies.
JPM earnings are scheduled to be published on January 13th, on the same day as Wells Fargo, Bank of America, Citigroup, BlackRock and others. Although higher interest rates are good for lenders, borrowers will have to face another squeeze, and their ability to pay back their debt, at a time when inflation is high, hangs on the balance.
Microsoft
The growth sectors (technology companies) were hit the most in the previous months, given their sensitivity to interest rates. Shares like Google, Amazon, and Apple can now be traded with popular brokerages like easyMarkets, but traders still need to put an effort into finding accurate opportunities. The inability to sustain earnings growth in Q4 is, no doubt, another downside risk for tech names.
Microsoft will release earnings on January 24th and thus far, it has been able to meet market expectations. That wasn’t enough for the share price to thrive, so MSFT is now trading approximately 30% below the peak set in November 2021.
3M
Capital has been shifting towards cyclical sectors like industrials and energy for a while now. During a time of rising inflation, companies that are active in the commodities space benefit from larger revenues. 3M is one of the most important names to monitor, and it is reporting earnings on the same day as Microsoft.
While 2022 was a profitable year, and that is already priced in, investors will shift their attention to the company’s guidance for the next few quarters. Inflation is showing signs of peaking and commodities eased significantly from the highs established during Q1 2022. That can have an impact on revenue and EPS.
Tesla
Reporting earnings on January 25th, Tesla is now seen by many as a beaten-down company, judging by the stock price performance. Down 74% from the peak, TSLA posted 5 consecutive months of heavy selling, suggesting there is little hope for a rebound, at least in the short term.
Things might change in the second half of the month and the earnings report can possibly fuel a recovery, in particular if the company provides encouraging guidance. Tesla is now selling over 400,000 cars per quarter, but it still needs to deal with other challenges like rising competition in the EV space.
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