Reporting week. New opportunities for market growth. $NFLX, $IBM, $TSLA
Last week, major banks including JPMorgan Chase, Citigroup, and Wells Fargo reported positive first quarter earnings results and provided guidance indicating that the recent loss of confidence from regional banks had a limited impact on the broader financial sector. Despite weaker-than-expected retail sales data causing stocks to decline on Friday, the three major averages were set to end the week with positive gains thanks to a strong start to corporate earnings. The decline in retail sales was double what was expected, continuing a trend of declining inflation partly due to lower gas prices.
Investors are now adopting a strategy of adding risk, as inflationary pressures begin to moderate. Many believe the Federal Reserve should begin cutting rates rather than continuing to increase them. On Friday, the Dow Jones Industrial Average declined 0.42%, with tech giants Apple, Microsoft, Intel, and IBM leading the decline. The S&P 500 Index ended down 0.21%, while the tech-heavy Nasdaq Composite declined 0.35%. Investors are looking for opportunities to jump back into the market, particularly in oversold technology companies such as Amazon, Apple Meta Platforms, and Google parent Alphabet, which have been hit hard by high interest rates.
Netflix (NFLX) is set to report its earnings after the close on Tuesday, April 18. Analysts are expecting the company to earn $2.85 per share on revenue of $8.17 billion, compared to earnings of $3.53 per share on $7.87 billion in revenue in the same quarter last year.
Investors are closely watching Netflix, which has been one of the better-performing large-cap tech stocks, rising nearly 50% in the past six months, outpacing both the S&P 500 index and the Nasdaq 100. The market is optimistic about the company's ability to regain its growth momentum, as shares have already risen more than 17% year to date.
In the Q4 earnings report, there was a noticeable slowdown in revenue growth, which rose just 1.9%. However, the company has guided for Q1 revenue to re-accelerate to 4% on a year-over-year basis. In a letter to shareholders, Netflix management expressed confidence in their growth strategy, highlighting the launch of paid sharing and the expansion of their ads offering. These initiatives have already begun to pay dividends, as the company's ad-supported tier has been successful in twelve global markets, exposing Netflix to an estimated $140 billion of brand advertising spending.
The company's upcoming content launches also add to the compelling case to remain invested in the stock. However, investors will have a clearer picture of the company's growth prospects when Netflix issues its guidance forecast for the next quarter and full year. Overall, while there may still be a buying opportunity for Netflix, investors should pay close attention to the company's revenue growth and growth initiatives to make informed investment decisions.
IBM (IBM) is scheduled to report its earnings after the close on Wednesday, April 19. Analysts are expecting the company to earn $1.26 per share on revenue of $14.35 billion, compared to earnings of $1.26 per share on $14.2 billion in revenue in the same quarter last year.
Investors have been waiting for IBM's transformation efforts to produce sustainable revenue results, as the company's shares have been rangebound over the past six months and have fallen 9% year to date, while the S&P 500 index has risen 8%. Despite progress in earnings, revenue growth has come to a standstill. In an effort to simplify the business, IBM is reportedly looking to divest its weather business, which includes weather.com, in a sale that could be valued at more than $1 billion.
IBM has been in a perpetual transformation cycle over the past decade, struggling to grow revenue. However, the company no longer relies heavily on its legacy business, as its hybrid cloud platform now accounts for more than 70% of total software revenue in the most recent quarter. The hybrid cloud provides IBM with the foundation to run any application.
To show signs of life beyond the appeal of its 5.16% dividend yield, IBM will need to demonstrate continued operating leverage and revenue growth acceleration. While the hybrid cloud platform provides a strong foundation, investors will be watching closely for any signs of growth in revenue and earnings.
Tesla (TSLA) is set to report its earnings after the market closes on Wednesday, April 19. Analysts are expecting earnings of 86 cents per share on revenue of $23.34 billion, compared to earnings of $1.07 per share on revenue of $18.76 billion in the same quarter last year.
Investors will be watching closely to see how much higher Tesla's stock can go. The shares have already risen 51% year-to-date, outpacing the 8% gain in the S&P 500 index. The stock has also more than doubled since hitting a 52-week low of around $101, surging over 104% to $207 on March 31.
Tesla has benefited from both record vehicle production and deliveries, but the company has also gone through a series of price cuts that could impact its revenue, profits, and guidance for fiscal 2023. Analysts will be closely monitoring Tesla's segment financials to see how the recent price cuts may have affected the average revenue per vehicle. Additionally, Tesla's profit margin profile and customer deposits will be important factors to watch.
Investors are somewhat nervous about what action to take ahead of the earnings report. While Tesla has not been the only high-growth tech stock to rise this year, its surge appears more pronounced when compared to other high-growth tech stocks. The company's increased focus on its growth strategy, particularly in production and profit margins, will be a major factor in its success for the just-ended quarter and the rest of the year.
IBM in upward trend: price rose above 50-day moving average on May 17, 2023
IBM moved above its 50-day moving average on May 17, 2023 date and that indicates a change from a downward trend to an upward trend. In of 39 similar past instances, the stock price increased further within the following month. The odds of a continued upward trend are .
Technical Analysis (Indicators)
Bullish Trend Analysis
The Momentum Indicator moved above the 0 level on May 17, 2023. You may want to consider a long position or call options on IBM as a result. In of 81 past instances where the momentum indicator moved above 0, the stock continued to climb. The odds of a continued upward trend are .
The Moving Average Convergence Divergence (MACD) for IBM just turned positive on May 15, 2023. Looking at past instances where IBM's MACD turned positive, the stock continued to rise in of 47 cases over the following month. The odds of a continued upward trend are .
The 10-day moving average for IBM crossed bullishly above the 50-day moving average on May 25, 2023. This indicates that the trend has shifted higher and could be considered a buy signal. In of 17 past instances when the 10-day crossed above the 50-day, the stock continued to move higher over the following month. The odds of a continued upward trend are .
Following a 3-day Advance, the price is estimated to grow further. Considering data from situations where IBM advanced for three days, in of 328 cases, the price rose further within the following month. The odds of a continued upward trend are .
Bearish Trend Analysis
The 10-day RSI Indicator for IBM moved out of overbought territory on May 24, 2023. This could be a bearish sign for the stock. Traders may want to consider selling the stock or buying put options. Tickeron's A.I.dvisor looked at 36 similar instances where the indicator moved out of overbought territory. In of the 36 cases, the stock moved lower in the following days. This puts the odds of a move lower at .
The Stochastic Oscillator demonstrated that the ticker has stayed in the overbought zone for 8 days. The longer the ticker stays in the overbought zone, the sooner a price pull-back is expected.
Following a 3-day decline, the stock is projected to fall further. Considering past instances where IBM declined for three days, the price rose further in of 62 cases within the following month. The odds of a continued downward trend are .
IBM broke above its upper Bollinger Band on May 17, 2023. This could be a sign that the stock is set to drop as the stock moves back below the upper band and toward the middle band. You may want to consider selling the stock or exploring put options.
The Aroon Indicator for IBM entered a downward trend on May 15, 2023. This could indicate a strong downward move is ahead for the stock. Traders may want to consider selling the stock or buying put options.
Fundamental Analysis (Ratings)
The Tickeron Valuation Rating of (best 1 - 100 worst) indicates that the company is seriously undervalued in the industry. This rating compares market capitalization estimated by our proprietary formula with the current market capitalization. This rating is based on the following metrics, as compared to industry averages: P/B Ratio (5.417) is normal, around the industry mean (3.984). P/E Ratio (57.471) is within average values for comparable stocks, (49.243). Projected Growth (PEG Ratio) (2.140) is also within normal values, averaging (1.486). Dividend Yield (0.051) settles around the average of (0.033) among similar stocks. P/S Ratio (1.946) is also within normal values, averaging (2.695).
The Tickeron PE Growth Rating for this company is (best 1 - 100 worst), pointing to outstanding earnings growth. The PE Growth rating is based on a comparative analysis of stock PE ratio increase over the last 12 months compared against S&P 500 index constituents.
The Tickeron Profit vs. Risk Rating rating for this company is (best 1 - 100 worst), indicating well-balanced risk and returns. The average Profit vs. Risk Rating rating for the industry is 83, placing this stock slightly better than average.
The Tickeron Seasonality Score of (best 1 - 100 worst) indicates that the company is fair valued in the industry. The Tickeron Seasonality score describes the variance of predictable price changes around the same period every calendar year. These changes can be tied to a specific month, quarter, holiday or vacation period, as well as a meteorological or growing season.
The Tickeron Price Growth Rating for this company is (best 1 - 100 worst), indicating steady price growth. IBM’s price grows at a higher rate over the last 12 months as compared to S&P 500 index constituents.
The Tickeron SMR rating for this company is (best 1 - 100 worst), indicating weak sales and an unprofitable business model. SMR (Sales, Margin, Return on Equity) rating is based on comparative analysis of weighted Sales, Income Margin and Return on Equity values compared against S&P 500 index constituents. The weighted SMR value is a proprietary formula developed by Tickeron and represents an overall profitability measure for a stock.
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Fundamental Analysis Ratings
The average fundamental analysis ratings, where 1 is best and 100 is worst, are as follows
