Investors suffered another group of difficult sessions last week. Both the Dow Jones Industrial Average (^DJI -0.12%) and the S&P 500 (^GSPC -0.58%) dropped 5%, and indexes are down by even more since the start of the year. Still, they remain significantly higher over the past 12 months.
Earnings season ramps up in the week ahead, and below we'll look at a few highlights from the long list of announcements that are coming. Tesla (TSLA -1.06%), McDonald's (MCD 1.70%), and Apple (AAPL -0.81%) are among the most anticipated of these earnings reports to watch.
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1. Tesla's cash flow
Tesla announces its full results on Wednesday, which means even more price swings ahead for this volatile stock. The electric car specialist had plenty of good news for shareholders in its last update, including soaring sales, profitability, and cash flow. Tesla achieved these wins in the third quarter despite major supply chain challenges and semiconductor shortages.
These issues likely impacted Q4 even more, but most investors are expecting another blockbuster sales result as revenue jumps over 50% to $16.2 billion. Look for positive comments from CEO Elon Musk about production trends across key factories in Shanghai, China, and Berlin, Germany, and in its Gigafactory in Austin, Texas.
Wall Street will be closely following Tesla's updated growth outlook, which implies roughly 50% annual delivery growth over several years while profit margins land in the low-teen range. The company will have to continue outpacing rivals to hit that ambitious goal, but its current momentum suggests that it can do just that.
2. Apple's services sales
Apple's highly anticipated fiscal first-quarter report is slated for Thursday afternoon. There's no shortage of reasons to follow this announcement from the world's most valuable tech company.
Apple had a banner year in fiscal 2021 thanks to the combination of robust consumer spending on premium tech products and a full refresh of its core product lines, from iPhone to Macs and iPad devices. And the company's soaring services segment has investors excited about rising margins and the growing proportion of recurring revenue on the way.
Thursday's report will likely add to this optimism as sales jump to over $118 billion and profits improve to about $1.89 per share from $1.68 per share a year ago. Looking further out, shareholders are just as excited about Apple's future as it uses assets like its huge cash stockpile to extend its lead into augmented reality, virtual reality, and potentially the automotive industry.
Listen for CEO Tim Cook to hint at some of these moves as he discusses Apple's innovation plans for 2022 and beyond.
3. McDonald's price increases
McDonald's stock has been a winner through the pandemic, but that performance will be tested in Thursday's earnings announcement. The fast-food leader might take a small step backward in fiscal Q4 following a return to customer traffic growth in Q3. Another big COVID-19 wave likely pressured demand while amplifying labor shortages, after all.
Still, McDonald's is finding ways to boost sales by making improvements to its drive-thru and delivery channels. Stores are becoming more profitable as well, due to slimmed-down menus and rising average order sizes.
The big question this week is whether Mickey D's will have room to raise its prices aggressively over the next few quarters, given surging costs in areas like food, labor, and transportation. If it can, then investors might see unusually high earnings from this dividend giant in 2022.
