Sunday, February 25, 2024
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The Biggest Stock Winners and Losers of Q4 Earnings Season

We’re now in the thick of earnings season and results are coming in at a fast and furious rate and it’s time to look at the Q4 earnings winners you should shortlist.

With 10% of S&P 500-listed companies having now reported financial results for the fourth and final quarter of 2023, 62% of companies have reported both better-than-expected earnings per share and revenue, according to data from FactSet.

That said, given that there are Q4 earnings winners, there also have been Q4 earnings losers.

Earnings have declined 1.7% year-over-year, on average, among companies that have issued their Q4 prints, showing that the operating environment remains challenging.

Many more earnings can be expected in the coming weeks, including from big technology companies, automakers, and retailers. As always, markets will move based on the results that are reported. Here are the biggest stock Q4 earnings winners and losers of the season.

United Airlines (UAL)

Shares of United Airlines (NASDAQ:UAL) are up 5% after the Chicago-based carrier issued stronger-than-expected guidance for the coming year.

United reported earnings per share of $2, and a 10% rise in revenue to $13.60 billion for the fourth quarter of 2023.

Those numbers beat the consensus expectations of analysts who expected a profit of $1.70 a share and revenue of $13.55 billion. The airline attributed the strong results to robust air travel during the year-end holidays.

Despite the earnings beat, United forecast a loss for the current first-quarter of 2024 because regulators have grounded the Boeing (NYSE:BA) 737 MAX 9 airplanes that it uses.

However, investors looked past the Q1 outlook and instead focused on the full-year guidance that was provided. United said that it expects a full-year 2024 profit of $9 to $11 a share. That’s ahead of the $9.48 a share expected on Wall Street. The strong print and full-year guidance make UAL stock a winner of Q4 earnings season.

Procter & Gamble (PG)

Procter & Gamble (NYSE:PG) also had a strong Q4 print, sending its share price up 5% immediately after the financial results were made public.

The consumer goods company, whose products include Tide laundry detergent and Gillette razor blades, announced EPS of $1.84 versus $1.70 that had been forecast among analysts.

Revenue came in at $21.44 billion versus $21.48 billion that had been estimated. The company’s sales were up 3% from a year ago.

In terms of guidance, Procter & Gamble said it expects fiscal 2024 earnings growth of 8% to 9%, narrowing its previous range of 6% to 9%.

Sales are expected to grow 2% to 4% this year. Company executives said on their Q4 earnings call that they are now seeing demand improve in North America and Western Europe after two difficult years caused by inflation and high interest rates.

The positive outlook and demand improvement has helped lift PG stock, which is now up 10% in the last 12 months.

Taiwan Semiconductor Manufacturing Co. (TSM)

The entire microchip and semiconductor sector rose after Taiwan Semiconductor Manufacturing Co. (NYSE:TSM) issued its Q4 financial results.

TSM stock itself is up over 10% since the world’s largest chip manufacturer issued earnings that beat Wall Street expectations across the board. Taiwan Semiconductor reported Q4 revenue of $625.53 billion New Taiwan dollars (US$19.62 billion), which topped consensus forecasts of NT$618.31 billion.

Profit in the quarter totaled NT$238.71 billion, which was better than the NT$225.22 billion that had been expected.

The company, which makes the most advanced microchips in the world, said that it is well-positioned to capture current and future growth opportunities, especially related to artificial intelligence.

Looking ahead, TSMC has forecasted that revenue for the current first quarter of 2024 will fall between US$18 billion and US$18.8 billion, exceeding estimates. TSM stock is up nearly 20% over the last 12 months.

JPMorgan Chase (JPM)

JPMorgan Chase (NYSE:JPM) is another winner of Q4 earnings season. The world’s largest bank had the best Q4 print among America’s major financial institutions.

JPMorgan reported EPS of $3.04, which was below the $3.32 that analysts had expected. However, revenue in the final quarter of 2023 amounted to $39.94 billion, topping the $39.78 billion that was forecast on Wall Street.

The profit miss was because of a nearly $3 billion fee it paid related to the U.S. regional banking crisis that erupted in spring 2023.

Despite the hefty fee it had to pay, JPMorgan’s revenue in Q4 increased 12% from a year ago. The bank is widely viewed as having weathered the high interest rate environment better than most other lenders.

Looking ahead, JPMorgan expects a strong showing in 2024 as money earned from deals on Wall Street, such as mergers and acquisitions and initial public offerings, improves. JPM stock has gained 23% in the last year, outpacing nearly all other bank securities.

Losers: 3M (MMM)

Now let’s talk about the losers of Q4 earnings season. First up is 3M (NYSE:MMM),which is down 11% after it announced weak forward guidance. The forward guidance, which overshadowed what was otherwise a strong Q4 showing from 3M have sunk the share price.

3M, best known as the maker of Post-It Notes, reported EPS of $2.42 and revenue of $8 billion. The numbers beat Wall Street forecasts calling for EPS of $2.31 and revenue of $7.70 billion.

The company’s operating profit margin in Q4 came in at 21%, up two percentage points from a year ago, and free cash flow totaled $6.30 billion, exceeding expectations of $4.90 billion.

Sadly, 3M issued forward guidance that disappointed, saying it expects EPS for all of this year to be $9.55. Wall Street had wanted $9.90 in 2024 EPS. The company added that its revenue is likely to grow only 1% to 3% this year amid tepid sales in China, where an economic slowdown is worsening. MMM stock is down 21% in the last year.

General Electric (GE)

The stock of General Electric (NYSE:GE) initially fell 4% after the company issued soft guidance for the year ahead, though the share price has since recovered a bit.

The industrial conglomerate announced EPS of $1.03, which was higher than the 91 cents consensus estimate of analysts who cover the company. Revenue in Q4 2023 rose 15% to $19.42 billion, beating forecasts of $17.67 billion. The company said the solid Q4 results were due to strong demand for parts and services at its jet engine business.

Like 3M, General Electric’s forward guidance disappointed. The company said it expects EPS of 60 cents to 65 cents for the current first quarter of 2024.

The Q1 guidance fell short of Wall Street forecasts of 72 cents a share. The muted outlook comes as General Electric continues to break itself into separate publicly traded businesses. Last year, the company separated its healthcare business.

It now plans to spinoff its energy business into a separate company in April 2024. GE stock is up 63% in the last 12 months.

Charles Schwab (SCHW)

Charles Schwab (NYSE:SCHW) managed to report Q4 financial results that beat Wall Street forecasts. But both the investment firm’s revenue and profits declined from a year earlier, sinking the stock.

Schwab announced Q4 EPS of 68 cents, which was ahead of consensus estimates that called for 64 cents. Revenue in the final quarter of 2023 totaled $4.45 billion, which matched analysts’ forecasts. Sadly, though, the company’s revenue was down 18% from a year earlier, and its profits were down 36% year-over-year.

Charles Schwab, one of the largest financial services firms, has suffered over the last year as high interest rates prompted customers to move money out of low-yielding accounts and into better-paying money-market funds.

The firm has also struggled to integrate TD Ameritrade, which it purchased for $26 billion in an all-stock deal. SCHW stock has declined 18% over the last 12 months, including an 8% drop so far in 2024, making it a loser of Q4 earnings season.

On the date of publication, Joel Baglole did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com InvestorPlace.com Publishing Guidelines.

Joel Baglole has been a business journalist for 20 years. He spent five years as a staff reporter at The Wall Street Journal, and has also written for The Washington Post and Toronto Star newspapers, as well as financial websites such as The Motley Fool and Investopedia.

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