Stocks to Watch This Earnings Season

We will learn a lot about the health of corporations worldwide in the weeks ahead. As yet another earnings season kicks off, we’ll soon know more about which companies are faring well and which not so well in the COVID-19 economy.

Some stocks warrant more investor attention than others on account of them benefitting from the current environment. Let’s take a sneak peak at some of the ones that could creep higher in the days before their reports on expectations of more strong results.

Will Sony Reach New Highs Leading up to Earnings?

Sony (NYSE:SNE) is one ADR that investors should be tuned into. The Japanese electronics manufacturer is scheduled to report fiscal 2021 third quarter earnings on February 3rd. The Street will be looking for EPS of $0.80 on revenue of $24.5 billion for the three-month period ended December 2020.

The key growth drivers here are Sony’s gaming and music divisions which are experiencing higher than expected sales during the pandemic. Homebound consumers desperate for entertainment are scooping up Sony’s PlayStation gaming consoles (including the recently launched PS5), PlayStation Plus subscriptions, games, and streaming music offerings like they are going out of style.

Meanwhile, the lesser-known financial services unit, which accounts for nearly one-fifth of sales is benefitting from healthy Japanese demand for life and non-life insurance, mortgages, and online banking services. This is helping to offset weakness in the Sony Pictures business which continues to be negatively impacted by closed movie theaters. Strength in gaming, music, and financial prompted management to raise its full-year revenue and profit guidance.

Sony is coming off a strong quarter in which revenue of $19.9 billion topped analysts’ estimates by 14%. Earnings easily surpassed forecasts as well and were up 150% year-over-year.  This is a stock that is trading near its 52-week high but is likely to reach new highs in 2021. It is still inexpensive at 15x earnings and the balance sheet contains an increasing $41.6 billion cash balance that is approximately six times the amount of long-term debt.

Will Evercore’s Stock Gap Up Again?

Financial stocks have been gaining favor in recent weeks with massive fiscal stimulus measures expected to spur economic activity, higher inflation, and potentially higher interest rates over time. One name to keep an eye on in the investment banking space is New York-based Evercore (NYSE:EVR).

Last quarter the mid cap company posted EPS that were more than twice the consensus forecast. In response, the stock jumped 7% on the day of the report. And while the bottom-line performance was flat relative to the prior year period, the quarter may have marked an inflection point. After declining in each of the past two years, revenue is expected to cross the $2 billion mark in 2021 to a record high.

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