Equity Investors should brace for another busy week as some of the largest U.S. companies report quarterly earnings amid strong signs that the country's economic rebound is helping businesses get back to normal.
So far, a record 87% of S&P 500 companies have beaten estimates, led by technology giants such as Apple (NASDAQ:AAPL) and Amazon.com (NASDAQ:AMZN). Overall, earnings in the first-quarter are forecast to expand more than 46%, according to Refinitiv.
With corporate profitability strengthening amid the economic reopening, investors are concerned that the U.S. central bank might be forced to tighten its monetary policy earlier than planned.
The S&P 500 rose 5.2% in April, adding to its 11.2% expansion for the year so far. The Dow rose 2.7% in April, while the tech-heavy NASDAQ gained 5.4% during the past month.
During the upcoming week, investors will get a chance to find out the most recent quarterly earnings from some of the country's largest companies. Below, three stocks from different sectors worth focusing on:
1. Berkshire Hathaway
Warren Buffett’s Berkshire Hathaway (NYSE:BRKa), (NYSE:BRKb) released its Q1 2021 earnings on Saturday. The results showed that his conglomerate’s holdings—which include stakes in insurance, transportation, and utilities companies among other shares—produced operating income that was up 20% from the same period a year ago.
Net earnings, which reflect Berkshire’s $282 billion equity portfolio, swung to a profit of $11.7 billion in the quarter, compared to a loss of $49.7 billion a year earlier, when the pandemic started to race across the U.S. and stocks slumped.
During Berkshire's annual meeting, Buffett, who is the company's CEO and perhaps one of the most respected business tycoons and investors in the country, said the recent boom in retail and day trading isn’t sustainable. “The gambling impulse is very strong in people worldwide,” he told investors.
“It creates its own reality for a while and nobody tells you when the clock’s going to strike 12 and it all turns to pumpkins and mice.”
Berkshire shares have gained 18% this year. They closed on Friday at $274.95.
2. Pfizer
Global pharmaceutical giant Pfizer (NYSE:PFE) will report its Q1 earnings on Tuesday, May 4, before the market open. Analysts expect the healthcare mega cap to post $0.78 a share earnings on sales of $13.65 billion.
Pfizer is one of the global leaders in COVID-19 vaccine production, supplying billions of shots to governments worldwide as they fight the deadly virus. The company projected in February that it is on track to make about $15 billion in revenue this year from the COVID-19 vaccine it developed with Germany’s BioNTech SE (NASDAQ:BNTX).
Company officials, led by Chief Executive Albert Bourla, are hopeful that their vaccine is capable of taking on new variants, which will enable the company to fetch a better price for their inoculation going forward. The company also plans to develop new products using its messenger RNA technology.
Pfizer shares have gained 5% this year, closing on Friday at $38.65.
3. PayPal
Payment processing giant PayPal Holdings (NASDAQ:PYPL) is scheduled to report Q1 earnings on Wednesday, May 5, after the markets close. Analysts, on average, expect the company to post $1.01 a share profit on sales of $5.91 billion.
With consumers flocking to online shopping during the pandemic, PayPal's platform has been experiencing a surge in volume that should contribute strongly to its earnings. In the previous quarter, the technology giant saw profit triple compared to the metric for the same period a year ago.
“PayPal has never been more relevant and needed than we are right now,” Chief Executive Officer Dan Schulman told Bloomberg in an interview in February.
“Clearly, the world has leapfrogged by three to five years into the next digital era, and there is no going back from here.”
Fueled by this unprecedented shift to e-commerce, PYPL shares have more than doubled during the past year, closing on Friday at $262.29 a share.