US Earnings Season Smooth in Q2...Focus on Large Growth Stocks' Performance

[Image source=Reuters Yonhap News]

[Asia Economy Reporter Song Hwajeong] As the US Q2 earnings season is progressing smoothly, attention should be paid to the upcoming earnings of large growth stocks.

According to Hanwha Investment & Securities on the 24th, 73 companies in the S&P 500 have reported their Q2 earnings this year. Among them, 84% recorded better-than-expected sales, and 88% posted profits exceeding market expectations. Until early July, the S&P 500 index was expected to see a 65.4% increase in Q2 earnings compared to the same period last year, but after the earnings announcements of these 73 companies, the forecast has been raised to a 75% increase.

Among sectors, the financial sector, which includes large companies that have reported earnings, showed the most significant improvement in expected profits compared to early July. However, since stock prices had risen due to expectations of profit increases from the reversal of loan loss provisions since the end of last year, the momentum of financial stocks' strength is now slowing down. Choi Bowon, a researcher at Hanwha Investment & Securities, said, "Among companies that reported earnings after July, stocks of companies that showed growth beyond recovery from COVID-19 and those that announced concrete long-term plans have shown significant price increases even after earnings announcements, rather than companies that simply had steady results over the past three months."

From the 26th of this month to the 6th of next month, 323 companies in the S&P 500 index are scheduled to announce earnings. This period is concentrated with earnings announcements from 10 of the top 15 companies by market capitalization and representative consumer discretionary and industrial companies that were heavily affected by COVID-19. Among the companies scheduled to report during this period, attention should be paid to the earnings of large growth stocks. Tesla will report on the 27th, Microsoft (MS), Alphabet, Apple, Visa, and Starbucks on the 28th, Facebook and PayPal on the 29th, and Amazon on the 30th.

Particularly, there is an opinion that PayPal deserves attention. PayPal quickly recovered its earnings as a representative untact (contactless) company even after the spread of COVID-19, and as vaccination rates increased, it began to actively expand overseas, which had remained a challenge, leading to continued stock price gains. Researcher Choi said, "We believe PayPal has high growth potential in the long term," adding, "Its subsidiaries are diversifying services, and in the second half of the year, it is expected to build an omnichannel through the launch of new services."

PayPal is also strengthening its cryptocurrency services, which began in October last year. Previously, the per-share cryptocurrency purchase limit was only $20,000, but it has been increased fivefold to $100,000. Researcher Choi said, "Not only simple cryptocurrency trading but also the cryptocurrency payment service 'Checkout with Crypto,' which can be used at offline stores, has been introduced," adding, "As customers using cryptocurrency trading services are also increasing their use of existing payment services, additional payment amount increases are possible."

This content was produced with the assistance of AI translation services.