Corporate America was bracing itself to report the biggest drop in earnings since the pandemic began three years ago, with profits for S&P 500 companies expected to fall by as much as 8% due to inflation, increased borrowing costs, and other headwinds.
However, businesses appear to be blowing past these low expectations, with 77% of reports beating analysts' estimates, with reported earnings being 7.2% above expectations.
A relatively weak dollar due to the trend of de-dollarization gaining momentum and the looming crisis over raising the debt ceiling due to political differences regarding government expenditure on both sides of the aisle might also have been unwitting tailwinds that have helped the likes of Apple Inc. (AAPL) keep the mood buoyant on the Street
After reporting stronger-than-expected results, the tech giant’s shares surged by 4.8% on May 5.
However, the first quarter still would mark a second straight quarterly fall for U.S. corporate earnings after COVID-19 hit corporate results in 2020.
Given this backdrop, let’s look at the prospects of three stocks ahead of their earnings release this week.
DIS has recently been in the news for being on a legal collision course with Florida Governor Ron DeSanctis. Differences between the company and the governor began with DIS’ opposition to the Parental Rights in Education Act, which prohibits lessons on sexual orientation and gender identity in public schools through the third grade.
In an alleged retaliation, the Florida Senate approved the Disney Special Tax-District Bill, which would seek to move the control of the Reedy Creek district from the company back to the state. DIS has expanded the lawsuit contesting this move to include new regulations passed by the state’s legislature that allow officials to nullify development agreements brokered by the company.
Outside the political and legal arena, DIS is going through a significant transition under the leadership of its returned CEO, Robert A. Iger, to give the company’s content executives more power and emphasize sports media more.
Ahead of its earnings release for the second quarter of fiscal year 2023, analysts expect the global entertainment giant’s revenue to increase by 13.2% year-over-year to $21.80 billion. However, its quarterly EPS is expected to come in at $0.94, down 13% year-over-year.
STE provides infection prevention and other procedural products and services through four segments: Healthcare; Applied Sterilization Technologies; Life Sciences; and Dental.
On May 3, STE announced a $500 million share repurchase authorization and a quarterly interim dividend of $0.47 per share, payable on June 28, 2023, to shareholders of record at the close of business on June 14, 2023. While demonstrating the management’s confidence in the company’s prospects, share repurchases would also positively impact EPS in the upcoming quarters.
Ahead of its fourth-quarter earnings release on May 11, analysts expect STE’s revenue and EPS for the period to increase by 5% and 5.4% year-over-year to $1.27 billion and $2.15, respectively.
For the fiscal year 2023, revenue and EPS are expected to increase 5.7% and 1.6% year-over-year to $4.85 and $8.05, respectively.
PKI’s offerings cater to diagnostics, life sciences, and applied markets through two segments: Discovery & Analytical Solutions and Diagnostics.
May 9 marked the official launch of PKI as a science-based solutions company aimed at revolutionizing next-generation scientific breakthroughs that solve the world’s greatest health challenges. The company would begin trading as RVTY from May 16 onwards.
Ahead of its earnings release on May 11, analysts expect PKI’s revenue and EPS to decline by 46.1% and 57.7% year-over-year to $678.61 million and $1.02, respectively.