Money & Markets Week Ahead for the week of July 19, 2021: Earnings season is in full swing again. I break down expectations for telecoms giant AT&T Inc. (NYSE: T).
I also provide some insight into an insurance IPO dropping this week.
We’ll also see how existing home sales went in June.
Here’s more of what to watch in the week ahead on Wall Street:
On the IPO Front
There are several initial public offerings (IPO) on the calendar this week.
Ryan Specialty Group plans to price its IPO on Thursday. It will list on the New York Stock Exchange under the ticker symbol RYAN.
What it is: Ryan Specialty was established in 2010 and is based in Chicago.
The company provides specialty insurance for agents, brokers and carriers.
It helps retail insurance brokers place complex risks. Ryan Specialty also works with retail and wholesale insurance brokers to underwrite and service hard-to-place risks.
That’s a complicated way of saying the company helps insurance brokers and carriers with more risky property, casualty and professional insurance.
According to its S-1 filing with the Securities and Exchange Commission, Ryan Speciality works with more than 200 insurance carriers worldwide and more than 15,500 retail insurance brokerages.
In 2020, Ryan Speciality generated $1 billion in total revenues — up from the $765 million the company reported in 2019.
In the three months ending March 31, 2021, the company reported total revenues of $311.5 million compared to $208.2 million reported in the same three months of 2020 — a 49.6% increase in top-line revenue.
The company increased its year-over-year operating losses from $63.1 million in 2019 to $70.5 million in 2020.
The offering: The company plans to sell 56.9 million shares at a price range of $22 to $25 per share.
The intent is to raise around $1.3 billion million with the offering.
According to Renaissance Capital, at a midpoint of $23.50 per share, Ryan Specialty would see a market value of $6 billion.
JPMorgan, Barclays, Wells Fargo Securities, Goldman Sachs, UBS Investment Bank, William Blair, RBC Capital Markets, BMO Capital Markets and Keefe Bruyette Woods are all bookrunners on the deal.
Deeper Dive: AT&T Earnings
The next quarter of earnings reports got underway late last week and gets into full swing this week.
Several big names are scheduled to report in the coming days.
Let’s focus on telecommunications giant AT&T Inc. (NYSE: T), which is scheduled to report earnings on Thursday.
For the most part, AT&T has been pretty consistent with earnings since 2017.
However, during the COVID-19 pandemic, the company experienced a drop in its quarterly earnings per share to a level not seen since 2017.
Those earnings have started to bounce back into more familiar territory.
In the first quarter of 2021, AT&T reported earnings of $0.86 per share — up from $0.75 per share the company reported in the last quarter of 2020.
AT&T Earnings: Revenue Projection
The company’s revenue tells the same story.
AT&T reported lower-than-expected quarterly revenue in four straight quarters, from October 2019 to July 2020.
It reversed that trend in the third quarter of 2020 and has beaten Wall Street projections over the last three quarters.
AT&T has met or beaten Wall Street EPS projections in 12 of the last 16 quarters. For the second quarter, analysts expect earnings of $0.79 per share on revenue of $42.6 billion.
The skinny: AT&T is in a very competitive telecommunications market.
In order to compete, the company recently said it was updating its Unlimited Elite cell service to include 4K movie streaming. Elite customers will also pay to avoid capped data speeds after a certain amount of use.
The company is also battling a 5G rollout on several fronts.
Despite this, I think AT&T will, once again, beat Wall Street expectations and report earnings closer to $0.80 per share.
Money & Markets Week Ahead: Data Dump
The National Association of Realtors® will release its monthly existing-home sales data for June on Thursday.
The report measures the change in the annualized number of existing homes sold in the United States during the previous month.
Existing home sales closed out 2020 on a high note, reaching as many as 6.9 million sold in October.
However, since the start of 2021, home sales have pushed down and have reached pre-pandemic levels as a lack of homes to sell has squeezed the market.
From May 2021 to June 2021, existing home sales tumbled 0.9%.
Expectations are for sales to tick back up to 5.9 million in June.
To finish off the Money & Markets Week Ahead, here’s a look at some of the key earnings reports due out this week:
International Business Machines Corp. (NYSE: IBM)
Prologis Inc. (NYSE: PLD)
JB Hunt Transport Services Inc. (Nasdaq: JBHT)
Netflix Inc. (Nasdaq: NFLX)
Phillip Morris International Inc. (NYSE: PM)
UBS Group AG (NYSE: UBS)
Johnson & Johnson (NYSE: JNJ)
Verizon Communications Inc. (NYSE: VZ)
Texas Instruments Inc. (Nasdaq: TXN)
Crown Castle International Corp. (NYSE: CCI)
Microsoft Corp. (Nasdaq: MSFT)
Intel Corp. (Nasdaq: INTC)
AT&T Inc. (NYSE: T)
Snap Inc. (NYSE: SNAP)
American Express Co. (NYSE: AXP)
Kimberly Clark Corp. (NYSE: KMB)
That’s all for this week.
Until next time…
Matt Clark, CMSA®
Research Analyst, Money & Markets
Matt Clark is the research analyst for Money & Markets. He is a certified Capital Markets & Securities Analyst with the Corporate Finance Institute and a contributor to Seeking Alpha. Prior to joining Money & Markets, he was a journalist and editor for 25 years, covering college sports, business and politics.