Stocks fell last week as investors prepared for a flood of new earnings reports on the way. Both the Dow Jones Industrial Average (^DJI 0.36%) and the S&P 500 (^GSPC -0.36%) dipped by less than 1%.
Several big-name stocks will announce earnings results in the week ahead, and here we'll look at a few highlights from that list, from Netflix (NFLX -7.50%), Procter & Gamble (PG -1.03%), and Fastenal (FAST 0.62%).
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1. Netflix's subscriber gains
Netflix's fourth-quarter earnings report on Thursday afternoon could spark big movements in the stock this week. Shares of the streaming video giant have declined since late 2021 as Wall Street shunned growth stocks. But Netflix just finished its biggest quarter yet for new content releases, thanks to aggressive content spending and pandemic-related production pauses that shifted most of its launches into late 2021.
Executives three months ago predicted that this flood of exclusive TV and movies, including hits like Don't Look Up, will power a sharp growth rebound as subscriber gains jump to 8.5 million in Q4. Hitting that mark would almost double the gains from the prior quarter and allow Netflix to finish the year at more than 222 million global members.
The bigger question is whether Netflix can return to its prior glory days of consistently expanding sales by more than 20% year over year. Fiscal 2021 fell below that key rate, but the company's new outlook will clarify whether that was just a short-term disruption related to the aftermath of the pandemic.
2. Procter & Gamble's price increases
Investors have some big questions ahead of Procter & Gamble's Wednesday morning earnings announcement. The consumer-staples titan is due to report a growth slowdown, with sales gains landing at about 3%, according to Wall Street predictions. But most investors' attention will be focused on whether P&G is still winning market share against peers like Kimberly-Clark. We'll get clues about that performance gap in metrics like organic sales volumes.
It's also unclear just how easily P&G will be able to pass along higher prices to consumers, and so investors will be watching for signs of success there on Wednesday. Ideally, the company can keep both volumes and prices rising at a steady clip.
Meanwhile, look for CEO David Taylor and his team to highlight P&G's impressive cash flow, which is likely to support many more dividend increases ahead for this blue-chip stock.
3. Fastenal's 2022 outlook
Fastenal's Wednesday report should give investors a clearer view into its latest operating trends, and into the health of the wider construction industry. The company, which supports a wide range of construction and manufacturing sectors, is expected to announce a 5% sales boost for the final quarter of the year, translating into steady growth for the full year of 2021.
Besides updates on the health of the construction markets it serves, investors will learn whether Fastenal was able to make improvements to its profit margin after it sat at 20.5% of sales for more than a year. Ideally, cost cuts and efficiency improvements will combine with rising prices to lift that metric and help accelerate earnings gains.
That bullish thesis assumes Fastenal will be able to pass along rising costs to its customers. It also relies on having management find ways around any supply chain or inventory challenges that pop up. Executives highlighted these problems back in October. We'll learn about the impact of these potential issues this week, when Fastenal comments about the initial outlook for the 2022 fiscal year.
