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- 👉 The Investing Week Ahead: Delta, Pepsi, & The Olympics
👉 The Investing Week Ahead: Delta, Pepsi, & The Olympics
& finally some M&A activity too...
Welcome back to work.
We hope you had a wonderful holiday weekend celebrating the US of A.
With earnings picking back up and some breaking news coming out — let’s dive in.
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Key Earnings Announcements:
Delta and Pepsi are in focus.
Monday (7/8): Greenbrier Companies
Tuesday (7/9): Byrna, Helen of Troy
Wednesday (7/10): Azz, Manchester United, Thera Technologies, WD-40 CO
Thursday (7/11): Delta, Conagra, PepsiCo
Friday (7/12): BNY, Citi, JPM Chase & Co, Wells Fargo
What We’re Watching:
It’s no secret that Pepsi (+23.6%) has lagged the S&P 500 (+86.2%) over the last five years — just as the entire consumer staples sector (XLP, +30.1%) has as well.
However, Pepsi has grown net revenue +6% YoY and free cash flow +39% YoY — totaling $8.1B. Cash from operations totals $12.8B and cash per share is around $5.85 — which is way above the sector average of $1.63.
Pepsi bulls will be looking for another dividend increase — recently raising the dividend by +7% to $1.35 per share. If Pepsi announces decent sales performance, continued cost-cutting initiatives, and a healthy dividend raise — this could be a great week for the stock.
Delta has been one of the poorest performing large cap stocks over the last five years, and analysts are keeping a closer eye on it than ever. Trading at only 7 times earnings — with earnings that have grown +162% in the trailing 12-month period — Delta’s report will be all about proving to the market that demand remains rock solid.
The Paris Olympics is also expected to be a major talking point — with Delta being the official airline of Team USA, and all of the expensive flight traffic that’s expected to come throughout the summer for the games.
Investor Events / Global Affairs:
High earnings expectations, a huge media merger, and Boeing pleads guilty.
Largest Quarterly Earnings Jump Since Early 2022?
This earnings season will test investor confidence in big tech stocks that have driven the S&P 500 up +17% this year.
Key tech giants like Nvidia (NVDA), Alphabet (GOOG), Meta Platforms (META), and Microsoft (MSFT) have seen significant gains — with Nvidia's market value surpassing $3 trillion.
S&P 500 companies are expected to report a +8.8% profit increase for Q2 2024 — the largest since early 2022. The top 10 companies in the index now account for 37% of its market cap but only 24% of its earnings.
High expectations are tempered by concerns over potential earnings misses and the Federal Reserve's interest rate outlook.
Analysts project a +11% profit rise for S&P 500 companies in 2024, with the communication-services sector expected to lead at +18%.
Investors are also watching consumer spending trends for broader economic insights.
“Analysts will be poring over those reports to see if we’re seeing a broader area of weakness in the more cyclical areas of the economy even though you’ve got this overlay of tremendous market performance from these tech leaders.”
— David Kelly, Chief Global Strategist at J.P. Morgan Asset Management
Massive Media Merger
Paramount Global (PARA) is merging with David Ellison’s Skydance Media — ending the Redstone family’s decades-long control. Skydance and its investors will spend over $8 billion to acquire National Amusements — Paramount's controlling shareholder — providing Paramount with much-needed cash.
Skydance aims to revitalize Paramount and CBS brands, improve profitability, and invest in digital platforms like Paramount+ and Pluto.
The deal values National Amusements at $1.75 billion and provides a $6 billion injection for Paramount’s balance sheet and shareholder buyouts. Non-Redstone voting shareholders can cash out at $23 per share, a +21% premium from January.
Post-merger, David Ellison — the son of Oracle founder Larry Ellison — will be the chairman and CEO. The deal includes a 45-day “go-shop period” for other bidders, but Skydance will be the sole owner of voting shares. Paramount’s three current CEOs plan to continue cost-cutting measures to manage over $14 billion in debt.
Boeing Pleads Guilty
Boeing has agreed to plead guilty to a criminal fraud charge and pay an additional $243.6 million fine related to the 737 Max crashes that killed 346 people.
The planemaker will incur the maximum fine of $487.2 million and must invest $455 million to enhance its compliance and safety programs.
Victims' families argue that the plea deal, which bypasses a courtroom trial, does not adequately hold Boeing accountable for the 346 deaths resulting from the crashes. Legal experts suggest that the guilty plea is unlikely to impact Boeing's defense contracts, given the Pentagon's significant reliance on the company.
Major Economic Events:
Inflation, inflation, inflation.
Monday (7/8): Consumer Credit
Tuesday (7/9): Fed Chairman Powell Testimony to Senate, NFIB Optimism Index
Wednesday (7/10): Fed Chairman Powell Testimony to House, Wholesale Inventories
Thursday (7/11): Consumer Price Index, Core CPI, Monthly US Fed Budget
Friday (7/12): Consumer Sentiment (prelim), Producer Price Index, Core PPI
What We’re Watching:
In May, inflation rose at the slowest pace of 2024 — prompting Powell to say it "suggests that we are getting back on a disinflationary path."
In May, producer prices in the United States increased +2.2% year-on-year in easing from an upwardly revised +2.3% gain in April — well below market expectations of +2.5%.
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Disclaimer: This is not financial advice or recommendation for any investment. The content is for informational purposes only, you should not construe any such information or other material as legal, tax, investment, financial, or other advice.t
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