This is a huge week on the earnings calendar, with several big-name, particularly FAANG, companies set to report quarterly numbers.
Investors will also get a glimpse into consumer optimism — a telltale sign of an economic recovery.
Here’s more of what to look for in the week ahead on Wall Street:
On the IPO Front
There just two initial public offerings on the calendar this week.
Let’s take a closer look at Aveanna Healthcare Holdings Inc. It plans to price its IPO on or around Thursday, April 29. It plans to trade on the Nasdaq under the ticker AVAH.
What it is: The company is based in Atlanta, Georgia. Aveanna provides pediatric and adult home health care services.
It focuses on home health care for high-cost patients and includes private nursing, hospice and in-home therapy.
In its S-1 filing with the Securities and Exchange Commission, it operates in 30 states and has 42,000 caregivers that tallied 30 million home care hours.
Aveanna said it generated $355 million in net revenue for the 12 months ending March 28, 2020. It also reported a gross margin percentage of 30.3%.
For the 12-month period ending April 3, 2021, the company projected net revenue between $418 million and $418 million and a gross margin percentage of 31%.
Total revenue for the company jumped from $1.25 billion in 2018 to $1.5 billion in 2020.
It’s income comes from Medicare payments for older patients and Medicaid payments for younger ones.
However, the company lost $76 million in 2019 and $57 million in 2020 — due mainly to interest expense.
The offering: The company will offer 38.2 million shares at a price range of between $16 and $18 per share.
It hopes to raise around $650 million with its IPO, which will be used to repay more than $500 million in debt.
According to Renaissance Capital, at the midpoint of $17 per share, Aveanna could see a market value of around $3.2 billion.
Barclays, JPMorgan, BMO Capital Markets, Credit Suisse, Bank of America Securities, Deutsche Bank, Jefferies, RBC Capital Markets and Truist Securities are all bookrunners on the deal.
The skinny: This is an interesting business model.
And with an ever-growing aging population, Aveanna’s services could get more popular.
However, its balance sheet is a concern. Aveanna is generating good revenue, but more is going out more than coming in.
Paying down its debt may cut those losses in the coming year.
Deeper Dive: FAANG Earnings
This is what I would call a “mega week” for earnings.
With the quarterly reporting season in full swing, some of the biggest names on the market report their earnings this week, including:
Tuesday
Microsoft Corp. (Nasdaq: MSFT)
Alphabet Inc. (Nasdaq: GOOG)
Wednesday
Apple Inc. (Nasdaq: AAPL)
Facebook Inc. (Nasdaq: FB)
Thursday
Amazon.com Inc. (Nasdaq: AMZN)
These are all FAANG stocks — Netflix Inc. (Nasdaq: NFLX) reported its earnings last week and beat expectations.
Most FAANG Stocks Outperform S&P 500
This is a pretty complex chart to read, so I’ll show you the broad strokes.
Over the last 12 months, most FAANG stocks have outperformed the S&P 500.
Apple and Alphabet (Google) have been stronger than the index, while Amazon and Netflix have underperformed.
FAANG Earnings Per Share and Margins Rise Year-Over-Year
From the above table, FAANG stocks increased both earnings per share (EPS) and net income margins — with the exception of Netflix — from 2019 to 2020.
Analysts are projecting slight drops in total income for Facebook, Apple, Amazon and Alphabet as well as EPS decreases from Q4 2020 to Q1 2021.
The skinny: FAANG earnings have done a great job of beating analysts’ expectations in each of the last three quarters.
I don’t see that changing much this time around.
Money & Markets Week Ahead: Data Dump
Consumer confidence reached a year high last month.
The Conference Board will release its monthly consumer confidence report on Tuesday and investors will be looking to see if the trend continues.
The consumer confidence index measures the level of optimism in economic activity.
A higher-than-expected reading indicates confidence is high while a lower reading indicates weaker confidence.
Consumer Confidence Hits High in March 2021
Last month, the index reached 109.7 — beating the expectation of 96.9. It was also the highest reading of consumer confidence since March 2020.
Analysts project consumer confidence continued to rise in April. Forecasts are for an index reading of 111.7.
Earnings Reports
To finish off the Money & Markets Week Ahead, here’s a look at some of the key earnings reports due out this week:
Monday
Tesla Inc. (Nasdaq: TSLA)
Vale S.A. (NYSE: VALE)
Canadian National Railway (NYSE: CNI)
Tuesday
Microsoft Corp. (Nasdaq: MSFT)
Alphabet Inc. (Nasdaq: GOOG)
Visa Inc. (NYSE: V)
Wednesday
Apple Inc. (Nasdaq: AAPL)
Facebook Inc. (Nasdaq: FB)
Qualcomm Inc. (Nasdaq: QCOM)
Boeing Co. (NYSE: BA)
Thursday
Amazon.com Inc. (Nasdaq: AMZN)
Mastercard Inc. (NYSE: MA)
Merck & Co. Inc. (NYSE: MRK)
McDonald’s Corp. (NYSE: MCD)
Friday
Alibaba Group Holding Ltd. (NYSE: BABA)
Exxon Mobil Corp. (NYSE: XOM)
Chevron Corp. (NYSE: CVX)
AbbVie Inc. (NYSE: ABBV)
That’s all for this week.
Until next time…
Safe trading,
Matt Clark
Research Analyst, Money & Markets
Matt Clark is the research analyst for Money & Markets. He’s the host of our podcast, The Bull & The Bear, as well as the Marijuana Market Update. Before joining the team, he spent 25 years as an investigative journalist and editor — covering everything from politics to business.
