The third-quarter earnings season is underway, with companies across a range of sectors due to report in the coming week.
Investors will be looking to see if Netflix, which is behind hit shows such as Bridgerton and Emily in Paris, will be able to deliver results strong enough to keep its stock driving to new highs.
In the world of luxury, markets will be searching for indicators as to whether the recently announced Chinese stimulus measures has improved the outlook for LVMH, when the French company shares its latest results.
The drivers behind the AI boom will continue to be in focus in the coming week, with chip-making machine manufacturer ASML due to share its latest quarterly update.
Major mining companies are also set to report, with Rio Tinto among those slated to release third-quarter figures.
Following earnings releases from several investment banks on Friday, Goldman Sachs is also set to post it latest results.
Here's more on what to look out for:
Netflix (NFLX) — Reports third-quarter results on Thursday 17 October
Shares in Netflix have recovered from sharp falls seen in 2022 to reach all-time highs, with the stock up 50% year-to-date.
AJ Bell's investment experts Russ Mould, Danni Hewson, and Dan Coatsworth said Netflix has reaffirmed "investors’ view that the company is indeed the winner in the streaming wars".
However, they pointed out that the shares now trade on more than 35 times earnings for 2024 and 30 times for 2025.
"Those lofty multiples mean that expectations are high both for the third and fourth quarters of 2024 as well as Netflix’s long-term earnings growth potential," they said.
Looking to the release of the latest results on Thursday, Netflix said in its second-quarter update that it expected to deliver 14% revenue growth year-on-year in Q3.
AJ Bell's investment experts said analysts were expected 14% growth in sales to $9.8bn (￡7.5bn). It is anticipated that net income will come in at $2.2bn, just below the first quarter's all-time high of $2.3bn.
Analysts are expecting earnings per share of $5.07 in the third quarter and then $3.82 in the fourth quarter, up from $3.80 and $2.15 respectively in the equivalent periods a year ago.
"Despite what the share price is telling us, Netflix’s biggest challenge may now be staying ahead of its rivals having got there, although management is clearly not going to rest on its laurels, as it continues develop gaming as another source of revenue to complement its powerful catalogue of prime film and series content.
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LVMH (MC.PA) — Reports third-quarter results on Tuesday 15 October
French conglomerate LVMH may be known for its focus on luxury, owning brands such as Louis Vuitton and Dior, but the company and its owners have been making headlines more recently for their reported moves in the sporting world.
LVMH recently announced a 10-year partnership with Formula 1, while the Financial Times reported that the company's CEO Bernard Arnault and his children have teamed up with energy drink maker Red Bull to buy Paris FC.
Despite these developments, shares have continued to ebb lower, with LVMH stock down 11% year-to-date.
Shares fell this week, after China decided to impose tariffs of as much as 39% on imports of European brandy, taking effect from Friday 11 October. This impacted the shares of French companies, including LVMH, which owns the brand of cognac Hennessy.
Aarin Chiekrie, equity analyst at Hargreaves Lansdown, said that the company's growth had "come off the boil in recent quarters, as tough economic conditions have even seen some luxury shoppers controlling their budgets a bit more".
However, he highlighted that LVMH's organic revenue positive territory, up 2% to €41.7bn (￡34.9bn) in the first half. Chiekrie pointed out that sales in Asia made up almost a third of that total, of which Chinese consumers account for a significant proportion.
The recent announcement of stimulus measures by China's central bank had brought a "fresh jolt of optimism around the outlook for LVMH," said Chiekrie.
"While it’s too early to tell if the Chinese stimulus package will help lead to a sustained economic recovery, investors will be keen to see if it’s enough to shift full-year sales guidance higher when LVMH releases its third-quarter update," he said.
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ASML (ASML.AS) — Reports third-quarter results on Wednesday 16 October
For those looking at plays in the AI space, Dutch company ASML is set to report its latest quarterly results on 16 October.
The company makes photolithography machines, which are essential to producing semiconductor chips, making it a major driver of the AI boom.
Shares are up 11% year-to-date but have been falling more recently.
Derren Nathan, head of equity research at Hargreaves Lansdown, said that the company's revenues so far this year have been lagging levels seen in 2023.
ASML posted second-quarter total net sales of €6.24bn in July, down from €6.9bn for the same period in 2023. The company also reported that its net income had declined to €1.58bn from €1.94bn last year.
"The company’s banking on a step change in sales of micro-chip manufacturing systems in the last two quarters of the year to keep 2024 revenue flat overall," said Nathan.
The consensus forecast from analysts are for revenue growth of 7% year-on-year to €7.1bn. For the fourth quarter, Nathan said analysts have earmarked quarter-on-quarter growth of over 24% to €8.8bn.
"ASML’s technology leadership leaves it well placed to benefit from long-term megatrends such as artificial intelligence," he said. "However, some of its key customers are facing their own challenges, so investors will also be looking for any pointers on next year’s outlook where growth is currently expected to accelerate further.”
Taiwan Semiconductor Manufacturing Company (2330.TW), the world's largest contract chipmaker, is also due to report third-quarter results next week on Thursday 17 October. The company already shared its revenues for the third quarter on Wednesday, which beat forecasts.
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Rio Tinto (RIO.L) — Reports third-quarter results on Wednesday 16 October
In the mining sector, Rio Tinto is set to release quarterly results on Wednesday, while Antofagasta (ANTO.L) will also share an update, followed by a statement from BHP (BHP.L) on the Thursday.
Shares in Rio Tinto saw little movement on the news, with it still down 12.5% year-to-date. However, shares in Arcadium Lithium soared following the announcement, up 80% over the past five days alone.
For the company as a whole, AJ Bell's investment experts said that iron ore, copper and aluminium are currently Rio Tinto's biggest earners.
"Management currently expects unchanged output in 2024 for iron ore, bauxite and aluminium, with an increase in copper and a small drop in alumina," said Mould, Hewson and Coatsworth.
"Copper production is forecast to rise 2% this year and Rio Tinto has a plan to increase output by 3% on a compound basis between 2024 and 2028. Meanwhile, overall group capex (capital expenditure) is budgeted to run at $10 billion a year in 2024, 2025 and 2026."
Meanwhile, Antofagasta is a pure play on copper, they said, with output of the metal is still forecast to come in at the low end of between 670,000 to 710,000 tonnes for 2024.
In the case of BHP, its biggest earners are iron ore, copper, and coal. In the company's latest quarterly update, AJ Bell's team said investors would also be looking for any further thoughts on the company's aborted bid for Anglo-American (AAL.L).
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Goldman Sachs (GS) — Reports third-quarter results on Tuesday 15 October
A number of banks reported on Friday to get the earnings season into swing, with JPMorgan posting a 2% fall in profits despite strong performance.
Wells Fargo (WFC), BlackRock (BLK) and BNY Mellon (BK) also reported on Friday, with stocks rising as investors cheered this first wave of bank earnings.
Next up is Goldman Sachs, Bank of America (BAC) and Citigroup (C) on Tuesday.
In the second quarter, Goldman Sachs reported profits had soared 150% from a year ago as investment banking surged.
Net income was $3.04 billion, which beat analyst expectations. Its total revenue of $12.73 billion also rose 17% from a year ago.
Goldman Sachs CEO David Solomon said in a conference call with analysts: "We are in the early innings of a capital markets and M&A recovery, and while certain transaction volumes are still well below their tenure averages, we remain very well positioned to benefit from a continued resurgence of activity,"
Shares are trading at all-time highs, with the stock up 33% year-to-date.
