Weekly Earnings Preview- The Banks Are Coming

The third-quarter earnings season is officially kicking off this week with investors looking for signs that rising costs will pressure U.S. corporate profits. On Friday, labor data showed the U.S. economy created significantly fewer jobs than anticipated in September. This week, besides banks, we're in for earnings reports from Delta Air Lines Inc. DAL, UnitedHealth Group Inc. UNH, and Domino's Pizza Inc DPZ.

JPMorgan Chase

On Wednesday before the market opens, Wall Street expects JPMorgan Chase & Co JPM to report earnings of $2.97 per share along with a revenue of $29.72 billion.

Undoubtedly, this bank earned its reputation for being known as the best-executing bank among its peers as well as one of the best-run banks across the globe. Due to its smart ongoing investments in areas like technology, the company's share price has outperformed its competitors over the past year, as well as six months. Given its organic expansion initiatives to develop new branches and loan offices, there's no reason to doubt that the growth trend will continue.

Alcoa

On Thursday after the close, Wall Street expects Alcoa Corporation AA to report earnings of 1.79 per share along with$2.93 billion in revenue. As one of the bright spots in the materials sector, the company's shares rose almost 50% over the past six months and 104% up year to date.

The rise has been helped by optimism surrounding the Biden administration's infrastructure spending plan that involves repairing the country's airports, roads, and bridges. Overall, the commodity that is used in a broad range of applications is enjoying a great run as the global economy goes back into motion. During its latest quarter, Alcoa posted its twelfth consecutive quarterly profit beat but it remains how it will benefit from those new funds. While higher aluminum prices seem to be in the cards, the aluminum giants need to show an optimistic outlook to keep the enthusiasm surrounding their stock going.

Walgreens

On Thursday before the markets open, Wall Street expects Walgreens Boots Alliance Inc WBA to report earnings of $1.02 per share along with revenue of $33.28 billion.

Shares have been under pressure, falling some 14% over the past half of a year. Despite the company's scale and global reach, gross margins have been declining over the last decade due to ongoing reimbursement pressures related to generic drugs, among other things. There's also the factor of growth in negotiating leverage that pharmacy benefit managers have over retail pharmacies. However, the company's revenue showed considerable strength in the latest reported quarter, rising 12% YoY to $34 billion, exceeding Wall Street estimates by $560 million as it administered more than nine million COVID tests and over 25 million vaccines to date. Considering it operates more than 9,000 retail locations across America, Puerto Rico, and the U.S. Virgin Islands, Walgreens should be able to bounce back.

Wells Fargo

On Thursday before the open, Wall Street expects Wells Fargo & Company WFC to report earnings of 99 cents per share on revenue of $18.4 billion. With the stock now up 58% year to date, it seems investors are willing to look beyond the bank's legacy issues and seek long-term sustainability.

While there are still plenty of challenges ahead, such as balancing much-needed cost cuts with growth, the bank has demonstrated significant operational improvements. Not only has Wells Fargo's charge-offs and core provisioning improved over the past few quarters, metrics such as adjusted expenses are also trending in the right direction, altogether helping to deliver a beat on the bottom lines. The upcoming results will reveal if a successful turnaround is sustainable in the near term.

Domino's

Also on Thursday, the largest pizza retailer globally is expected to report revenue of $1.03 billion and earnings of $3.11 per share. After a great momentum, Domino's gained during the pandemic, we're about to see how it is dealing with a multitude of potentially game-changing factors as economies reopen.

UnitedHealth Group

On the same day before the opening bell, UnitedHealth Group will also release earnings. With its strong market position and an attractive core business constantly enhanced with new deals and expansion of offerings, its prospects are solid with its health services segment being a source of significant diversification benefits.

Setting the Tone For the Month

What companies reveal about the impact of supply-chain disruptions, labor shortages and the ongoing pandemic could easily set the trading tone for the rest of October.

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