Investing

Earnings Previews: Netflix, Morgan Stanley, Procter & Gamble, UnitedHealth

More than a dozen large (or hot) companies are set to report quarterly earnings this week. While earnings season is sure to take a backseat to Wednesday’s inauguration of Joe Biden and Kamala Harris, investors still want to know what to expect.

First up is Netflix Inc. (NASDAQ: NFLX), reporting fourth-quarter and full-year results after markets close Tuesday. More important than the financial results, perhaps, will be the number of new subscribers the company posts. Analysts are expecting Netflix to add 6 million global subscribers in the quarter, pushing its total subscriber base to 201 million. Recent price hikes and slowing U.S. subscriber growth are red flags to some analysts and investors.

In the first two and a half weeks of the new year, shares have dipped nearly 8%, after rising by more than two-thirds in 2020. The stock trades at a multiple of around 78 times expected fiscal 2020 earnings per share (EPS) of $6.28 and about 55 times expected 2022 EPS. For the quarter, Netflix is expected to report EPS of $1.39 on revenue of $6.63 billion. Full-year revenue is tabbed at just under $25 billion, up about 24% year over year.

Morgan Stanley (NYSE: MS) is set to report fourth-quarter and full-year earnings before markets open on Wednesday. The big bank is getting a boost from Tuesday’s earnings report from Goldman Sachs. Both banks rely heavily on their trading desks and their investment banking deals. Goldman showed big results in both, and Morgan Stanley should see similar gains.

The bank’s stock is up nearly 10% so far in 2021, after posting a gain of around 38% last year. Analysts expect quarterly EPS of $1.27 and full-year profits per share of $5.85, up 12.7% year over year. Fourth-quarter revenue is forecast at $11.54 billion, up 6.3%, while full-year revenue is expected to rise by 11% to nearly $46 billion. Shares trade at a multiple of 12.8 to expected 2021 earnings and 14.2 expected earnings in 2022.

Procter & Gamble Co. (NYSE: PG) is one of two Dow 30 components scheduled to report before Wednesday’s opening bell. Like other blue chip stocks, its dividend is its main attraction, and for good reason. The company has paid a dividend for more than 130 years and for 60 consecutive years. At its current annual dividend of $3.16, the yield is 2.35%.

Shares of the consumer products giant are off to a rocky start in 2021, down about 3.1%, after gaining more than 14% in 2020. Analysts are expecting EPS of $1.51 for the fourth quarter and $5.59 for the full year. Sales are forecast to total $19.3 billion in the quarter and $74.7 billion for the year. At the current share price, P&G stock trades at a multiple of 24.1 to expected 2021 earnings and 22.5 to expected earnings in 2022.

UnitedHealth Group Inc. (NYSE: UNH) is the other Dow component reporting Wednesday morning. Health care companies have had an up and down year. The COVID-19 pandemic has reduced the number of elective procedures that patients can schedule, and that has led to lower payouts from insurers. UnitedHealth recently announced a $13 billion acquisition of medical technology firm Change Healthcare that diversifies the company’s business into a sector that will be around even if the Democratic hold on policy should lead to a single-payer health care system.

For the year to date, UnitedHealth shares are up less than 1%, after adding more than 21% in 2020. Estimated fourth-quarter EPS comes in at $2.41 and full-year EPS at $16.77 (up 15% year over year). Analysts are looking for revenue of $65.1 billion in the quarter and $256.7 billion for the year. UnitedHealth pays an annual dividend of $5.00, for a yield of 1.42%. At recent trading levels, the stock trades at a multiple of 21.0 to expected 2021 earnings and 19.3 times expected EPS in 2022.