The upcoming week is a chock full of earnings reports.
Here are four big ones I will be watching closely as earnings season heats up.
First Commonwealth Financial (April 23)
First Commonwealth (FCF) is one of my favorite small banks.
The stock has been mired down with most banks these days, but I like its trend in terms of income and earnings growth. FCF has five full fiscal years of demonstrated growth in interest income, with 16% growth in 2018. Granted, many banks have had good track records during that time frame, but FCF offers a nice track record for the price. Its smaller size makes it less exposed to macroeconomic risk versus say a large name like Wells Fargo (WFC) .
Regarding net income, FCF did have a miss in 2017, with a 7.43% pullback, but overall I like the way the bank has been run. Next week, I expect to see some earnings growth. FCF's track record of late has been on point, and the dividend is solid. It's a small name, but a name to pay attention to.
Harley-Davidson (April 23)
Harley (HOG) has quite simply seen better days. Are they still profitable? Yes. Does their business show any signs of life in terms of solid growth? Not in a while.
The classic maker of American motorcycles has suffered from weakening revenues over the past five years. With tough sales, its bikes seem to have fallen out of trend. Bikers are opting for smaller, more nimble motorcycles, rather than Harley's big, loud, metallic machines.
I've seen a fair bit of blame put on things like tariffs. I have to cry foul here. HOG was suffering sales declines long before President Trump entered office. Annual sales have been stagnant since 2014.
From the quarterlies that I've watched, Harley-Davidson has used higher prices, and a varied product lineup to attempt to soften the effect on earnings. The bleeding was stopped in 2018, but HOG still didn't exactly throw together a golden year for investors.
I expect next week to include more of the sales declines that have plagued the bike maker over the last few years. They've done a bit better in managing net income, but it's still a problem.
I've considered this company a "hold" at best, until we see a genuine turnaround in sales.
Snap Inc. (April 23)
Snap (SNAP) has doubled so far this year. Now, with their first-quarter earnings expected next week, they have to prove why it makes sense.
I am not a fan of this stock, and am strongly considering shorting it Monday morning. Its product is extremely limiting in what you can really do with it, and I don't see the massive potential for advertising revenues past a certain point. After years of impressive revenue growth, Snap has still failed to produce profits.
In its fourth-quarter results, the company reported a leveling of daily active users at 186 million. Long term, I just don't see how the company can keep pushing revenues in a profitable way if it can't jump start that number.
The stock has performed very well this year, climbing from $5.79 up to a high of $12.35. Nonetheless, I don't see the financial significance behind it. If anything, the early climb in 2019 has removed the incentive to trade the stock. There aren't any earnings to speak of.
Unless we get some sort of surprise in next week's first-quarter release, I don't think the pricing is sensible. Pay attention to user growth. It'll tell the story.
TD Ameritrade (April 23)
My favorite out of the online brokerages, TD Ameritrade (AMTD) has vastly increased its revenue potential after the completed acquisition of Scottrade. Moving forward, it will now become a question of how the discount brokerage firm uses that scale to leverage more from customers. I don't have much to say on this one other than that when you look at the company's annual earnings growth prior to the addition of Scottrade in 2018, it was creating positive figures.
With the marketing the company has been putting into driving the business, I think we're going to see good things next week. Full-year estimates have TD Ameritrade putting up earnings of $4.03 per share. That would mean the stock is trading at a forward P/E of 13.28x full-year earnings projections. Count in the 2.2% dividend yield, and I think this is an attractive long-term play.
One of the things I like about these firms is that even a bad market can bring on heavy trading. That means AMTD could have a good revenue quarter even if the market tanks.