What We’re Watching For This Earnings Season

TL;DR

Expectations are low for earnings season, share buybacks can be mismanaged, and the Halliburton/Baker Hughes deal is still ongoing.

Transcript

Chris Hill: Earnings season kicks off a week from today with Alcoa. One thing you're curious about as we head into this earnings season? Personally, I don't have a great feel for it at this point. I realized, when I was watching CNBC this morning, they were talking about earnings season, that I didn't have a great handle on the expectations, wherea... Read More

Key Insights

• 😘 Earnings season expectations are currently low, creating uncertainty in the market.
• 🔄 Share buybacks can be mismanaged and may not always result in a reduction in share count.
• 🤨 The Halliburton/Baker Hughes deal is facing delays and negative press, raising doubts about its completion.
• ❓ Soda companies are diversifying their offerings to combat declining soda sales.
• ❓ Share buyback activities have increased significantly in recent years.
• ❓ The market's performance tends to influence the decisions companies make regarding share buybacks.
• ❓ Dividend boosts may be a preferable option over share buybacks to create shareholder value.

Questions & Answers

Q: What are the expectations for earnings season?

Expectations for earnings season are low, as the market is uncertain about the results. It is unclear how the market will react to earnings announcements and forward guidance.

Q: What is the impact of share buybacks on companies?

Share buybacks can artificially inflate earnings per share and share prices. However, they must be managed carefully to avoid negative market psychology and to ensure a reduction in the share count outstanding.

Q: What is the status of the Halliburton/Baker Hughes deal?

The Halliburton/Baker Hughes deal is still ongoing, but negative press and delays have hindered its progress. Baker Hughes has the option to back out of the deal at the end of the month.

Q: How are soda companies adapting to changing consumer preferences?

Soda companies, like Dr Pepper Snapple Group, are investing in non-soda beverages, such as sports drinks like BODYARMOR. They are trying to reduce their dependence on soda due to declining sales.

Summary & Key Takeaways

• Earnings season expectations are low, with the market uncertain about the results.

• Share buybacks have been a popular strategy, but many companies have not executed them effectively.

• The Halliburton/Baker Hughes deal is still in progress, but there is a possibility of it falling through.