Stocks were volatile again last week but ended higher as investors reacted to a mixed week for Q4 earnings reports. The Dow Jones Industrial Average (^DJI 0.63%) and the S&P 500 (^GSPC 0.38%) each gained over 1% following a brutal January. Indexes are still in negative territory so far in 2022.
Earnings season is still going, and here we'll look at a few highlights from the long list of announcements on the way. Coca-Cola (KO 0.92%), Disney (DIS +0.61%), and Twilio (TWLO +2.96%) are a few of the most anticipated earnings reports to watch in the coming days.
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1. Disney's streaming additions
Investors are eager for Disney's next operating update, slated for Wednesday afternoon. The entertainment giant's stock has underperformed the market by a wide margin in the past year or so, especially after growth slowed in the Disney+ streaming service in fiscal Q4.
We'll get a key update on that digital content platform on Wednesday, with the big question being whether Disney endured lackluster user acquisition numbers, as Netflix (NFLX +0.02%) did in late January. Even so, management is still likely to express confidence about the long-term growth plan.
Meanwhile, look for the company to have good things to say about the reopening path for its theme parks, resorts, and cruise lines despite temporary COVID-19 closings in a few areas. Disney's wider recovery should track nicely with the rebound in the travel industry, which appears to be gaining steam as the world emerges from the pandemic.
2. Twilio's growth rate
Twilio, the cloud-based communications specialist, has seen its stock pummeled in recent weeks. But the slump has generated excitement among some investors who see a bargain. Shareholders are hoping that a rebound rally might be sparked by its upcoming earnings report on Wednesday afternoon.
The company's last announcement contained mostly good news. Sure, expenses are still swamping earnings and producing net losses. But Twilio's sales were up 65% in Q3. Most investors who follow the stock are looking for just a modest expansion slowdown, to about 40% growth, this quarter.
In addition to solid sales trends, watch Twilio's net expansion rate for signs that customers are still finding much more value from its communication platform. That rate was 131% last quarter and should land comfortably above 100% again in Q4, meaning clients are still renewing contracts at higher annual commitments. Success here should give management more confidence to project a solid start to fiscal 2022 ahead.
3. Coca-Cola's sales volume
Coca-Cola will announce its Q4 results before the opening bell on Thursday morning. The beverage giant's stock has outperformed the S&P 500 in recent weeks, partly because investors have turned to more stable growth businesses – and partly because Wall Street is looking for an accelerating rebound from the drink giant.
Coke said last quarter that the rebound was already gaining steam. Organic sales were up 14% in Q3, beating expectations and putting the company well ahead of PepsiCo (PEP +0.21%). The company should continue to outperform its smaller rival as the pandemic winds down thanks to its focus on more on-the-go beverages.
Income investors will have plenty of good news to celebrate in this report, including the surging cash flow that promises to fund significant dividend increases in 2022 and beyond. The Dividend King's last two increases have been modest because of COVID-19 disruptions. But expectations are high for its next boost, probably announced in late February, which will mark Coke's 60th consecutive annual raise.
