Tuesday March 21, 2023
United Airlines Reports Earnings
United Airlines Holdings, Inc. (UAL) posted its fourth quarter and full-year earnings report on Tuesday, January 17. Despite reporting strong quarterly earnings, the airline's shares fell more than 2% following the release.
The company reported total operating revenue of $12.4 billion for the quarter, up from $8.2 billion in revenue reported last year and above analysts' expectations of $12.2 billion. For the full year, United reported $45.0 billion in revenue, an increase from $24.6 billion the year before.
"Thank you to the United team that, last month, managed through one of the worst weather events in my career to deliver for so many of our customers and get them home for the holidays," said United Airlines CEO, Scott Kirby. "Our dedicated team used our state-of-the-art tools to prepare for the bad weather, take care of our customers and quickly recover once the worst of the weather had passed. Over the last three years, United has made critical investments in tools, infrastructure and our people – all of which are essential investments in our future."
United posted net income of $843 million, or $2.55 per adjusted share during the quarter. This was up from a net loss of $646 million, or $1.99 per adjusted share during the same quarter last year. For the full year, the company reported net income of $737 million, a significant jump from the $2.0 billion in net loss reported for fiscal 2021, but still below the pre-pandemic profits of fiscal 2019.
During the fourth quarter, United's total revenue per available seat mile (TRASM) increased 26% compared to its pre-pandemic TRASM of the fourth quarter of 2019. United announced the addition of 100 Boeing 737 MAX aircraft and an order of 100 Boeing 787 Dreamliners, the largest widebody order by a U.S carrier in the history of commercial aviation. United's 2023 summer schedule was also released with the inclusion of three additional cities for a total of 37 destinations across Europe, Africa, India and the Middle East. For the first quarter of fiscal 2023, United projects profits of $0.50 to $1 per share and full year diluted earnings per share between $10 to $12.
United Airlines Holdings, Inc. (UAL) shares ended the week at $49.46, down 3% for the week.
Procter & Gamble Posts Earnings Report
The Procter & Gamble Company (PG) reported its second quarter earnings on Thursday, January 19. The company reported a decrease in both revenue and profits causing its shares to decrease by 1% following the release.
Procter & Gamble's net sales for the quarter were $20.8 billion. This was a 1% decrease from $21.0 billion in net sales during the same quarter last year but above analysts' expectations of $20.7 billion.
"We delivered solid results in the second quarter of fiscal year 2023 in what continues to be a very difficult cost and operating environment," said Procter & Gamble CEO, Jon Moeller. "We remain committed to our integrated strategies of a focused product portfolio, superiority, productivity, constructive disruption and an agile and accountable organization structure. They remain the right strategies to navigate through the near-term challenges we're facing and continue to deliver balanced growth and value creation."
The company reported net earnings of $4.0 billion or $1.59 per adjusted share for the quarter. This was down from net earnings of $4.2 billion, or $1.66 per adjusted share at the same time last year.
The Cincinnati, Ohio-based company offers a variety of popular brands, including Crest, Dawn, Febreze, Gillette, Tide, Pampers and others. PG reported decreases in net sales for most of its segments, which was primarily due to an unfavorable foreign exchange. Organic sales increased by 5% compared to last year. The company attributed the increase in organic sales to higher pricing and a positive product mix, which was partially offset by a decrease in shipment volumes. For fiscal year 2023, PG expects organic sales to grow about 4% to 5% but expects headwinds of $3.7 billion for the remainder of its fiscal year.
The Procter & Gamble Company (PG) shares ended the week at $150.79, down 5% for the week.
Netflix Reports Quarterly Earnings
Netflix, Inc. (NFLX) released its fourth quarter and full-year earnings report on Thursday, January 19. While the streaming entertainment company reported profits that missed analysts' expectations, the company's stock prices rose more than 6% following the release.
Netflix posted quarterly revenue of $7.9 billion. This is up 16% from $7.7 billion in revenue reported at the same time last year but below the $8.2 billion analysts predicted. For the full year, the company reported revenue of $31.6 billion, an increase from $29.7 billion last year.
"2022 was a tough year, with a bumpy start but a brighter finish," wrote Netflix in a letter to shareholders. "We believe we have a clear path to reaccelerate our revenue growth: continuing to improve all aspects of Netflix, launching paid sharing and building our ads offering. As always, our north stars remain pleasing our members and building even greater profitability over time."
For the quarter, Netflix posted net income of $55 million or $0.12 per adjusted share. This is down from $607 million or $1.33 per adjusted earnings reported at this time last year. For the full year, Netflix had $4.5 billion in net income, a decrease from $5.1 billion in net income reported last year.
In the fourth quarter, Netflix saw its paid net ads come in at $7.70 million down from $8.30 million last year, but above its forecast of $4.50 million. Operating income for the quarter was $550 million down from $632 million last year. Netflix attributed the decrease in operating income to higher-than-expected revenue and slower-than-forecasted hiring. During reporting of the earnings, Netflix co-CEO Reed Hastings announced he would step down from his role as co-CEO. Greg Peters will be promoted to co-CEO and serve alongside current co-CEO Ted Sarandos. For fiscal 2023, the company expects revenue growth of 4% and to roll out their paid sharing feature more broadly which will give members the option to pay extra if they want to share their accounts with persons they do not live with.
Netflix, Inc. (NFLX) shares closed at $331.08, up 3% for the week.
The Dow started the week at 34,222 and closed at 33,376 on 1/20. The S&P 500 started the week at 3,999 and closed at 3,973. The NASDAQ started the week at 11,070 and closed at 11,140.
Treasury Yields Continue to Fluctuate
Yields on U.S. Treasuries fell midweek after U.S. producer prices decreased more than expected in December. Yields rebounded towards the end of the week as initial filings for unemployment dropped to the lowest level since June of 2022.
On Wednesday, the Labor Bureau released the producer price index (PPI). For the month of December, the index fell by 0.5%, which was more than the 0.1% increase economists expected. Year-over-year, the increase in wholesale prices slowed to 6.2%, the lowest level in nine months.
"The market was overbought," said chief investment strategist at CFRA, Sam Stovall. "Today's economic data served as a trigger to initiate a profit taking spell and the groups with most profits to take have been the ones that have done best last year."
The benchmark 10-year Treasury note yield opened the week of January 17 at 3.51% and traded as low as 3.32% on Thursday. The 30-year Treasury bond opened the week at 3.61% and traded as low as 3.49% on Thursday.
On Thursday, the U.S. Department of Labor reported that initial claims for unemployment decreased 15,000 to 190,000 for the week ending January 14. Continuing unemployment claims increased 17,000, reaching 1.6 million.
"It is a frustrating reminder for the Fed that the labor market remains tight as employers hold onto workers," said lead U.S. economist at Oxford Economics, Matthew Martin. "We don't expect a spike in initial jobless claims even as the economy slows."
The 10-year Treasury note yield finished the week of 1/20 at 3.48%, while the 30-year Treasury note yield finished the week at 3.66%.
Mortgage Rates Drop Further
Freddie Mac released its latest Primary Mortgage Market Survey on Thursday, January 19. Long-term mortgage rates continued to fall.
This week, the 30-year fixed rate mortgage averaged 6.15%, down from last week's average of 6.33%. Last year at this time, the 30-year fixed rate mortgage averaged 3.56%.
The 15-year fixed rate mortgage averaged 5.28% this week, down from 5.52% last week. During the same week last year, the 15-year fixed rate mortgage averaged 2.79%.
"As inflation continues to moderate, mortgage rates declined again this week," said Freddie Mac's Chief Economist, Sam Khater. "Rates are at their lowest level since September of last year, boosting both homebuyer demand and homebuilder sentiment. Declining rates are providing a much-needed boost to the housing market, but the supply of homes remains a persistent concern."
Based on published national averages, the savings rate was 0.33% as of 1/17. The one-year CD averaged 1.28%.
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Published January 20, 2023
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