Stocks dropped last week as investors prepared for the next onslaught of earnings reports from the world's biggest companies. The Dow Jones Industrial Average (^DJI 0.47%) shed 0.3% and the S&P 500 (^GSPC 0.98%) fell by 1.9% in the first trading week of 2022.
Several big-name stocks will announce earnings results over the next few days. Below we'll look at a few highlights from that list: Reports on the way from Delta (DAL 0.14%), Taiwan Semiconductor (TSM 0.25%), and Citigroup (C 1.17%).
1. Delta's passenger volume
Delta announces its fiscal fourth-quarter results on Thursday morning, and investors have some big questions heading into that report. In mid-December, the management team said that it expects to reach roughly 90% of its pre-pandemic passenger volume in 2020, on the way to a full rebound by 2024. Delta is aiming for over $9 billion in annual cash flow by then, too, with significant earnings growth along the way.
But investors are concerned about what the latest wave of COVID-19 cases could do to Delta's fragile rebound. Adjusted earnings broke into positive territory last quarter for the first time since 2019. However, the omicron variant likely put new pressure on that volume rebound even as fuel costs take a bigger bite out of profits.
In any case, look for CEO Ed Bastian and his team to stress Delta's progress at gaining efficiency and boosting operating margin and cash flow. Success in these areas should lay the groundwork for better returns as the airline industry fully recovers over the next few years.
2. Taiwan Semiconductor's 2022 outlook
The semiconductor shortage has been a huge story on Wall Street over the last year since it touches so many industries. We'll get some key updates on that score on Thursday when Taiwan Semiconductor posts earnings results. A global leader in the industry, TWSC counts some of the biggest growth stocks on the market as its customers, including Nvidia and Apple.
Executives said in October that Q4 sales should land between $15.4 billion and $15.7 billion, and that 23% spike would imply progress at boosting production volumes. Investors are hopeful that this rebound also comes with significant price increases that reflect TWSC's leadership position.
Looking ahead, the company should benefit from strong demand for tech products through 2022. Watch for those trends to support a bullish outlook for 2022, and for the current fiscal quarter -- assuming TWSC isn't facing any major input shortages or production bottlenecks.
3. Citigroup's rebound plan
Citigroup shares stumbled in late 2021 on fears of a growth slowdown tied to the omicron variant. But the banking giant might have some brighter news to report in its Friday earnings announcement.
Robust demand across its consumer and investment banking segments helped sales rise 3% in the prior quarter, and earnings expanded much faster. "The recovery from the pandemic continues to drive corporate and consumer confidence," CEO Jane Fraser said three months ago, "and is creating very active client engagement." Investors will want to see more evidence of that recovery this week, even as the omicron variant slows growth in a few areas.
At the same time, Citigroup needs to make progress closing its performance gap with peers on core efficiency metrics. Fraser is working on fixing these issues so that the company can trade at premiums that approach rivals such as JPMorgan Chase and Bank of America.
Friday's report might show progress on this score heading into 2022, but shareholders are likely in for a multi-year turnaround story for this bank stock.