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Sunday July 21, 2024



Netflix Announces Earnings

Netflix, Inc. (NFLX) released its fourth quarter and full-year earnings report on Tuesday, January 23. The streaming services's stock prices increased by almost 10% following the report showing better-than-expected subscriber growth.

Netflix posted quarterly revenue of $8.83 billion. This is up 12% from the $7.85 billion in revenue reported at the same time last year and above the analysts' expectations of $8.72 billion. Revenue for the full year came in at $33.72 billion.

"The year has shown the need for Netflix to balance consistency and continuous improvement with adaptability," wrote Netflix in a letter to shareholders. "We believe there is plenty of room for growth ahead as streaming expands, and our north star remains the same: to thrill members with our entertainment. If we can continue to improve Netflix faster than the competition, we will have an increasingly valuable business – for consumers, creators and shareholders."

For the quarter, Netflix posted net income of $937.84 million or $2.11 per adjusted share. This is up from net income of $55.28 million or $0.12 per adjusted earnings reported at this time last year. For the full year, net income returned at $5.41 billion.

In the fourth quarter, Netflix added its largest paid net subscribers of 13.1 million compared to an increase of 7.7 million in the year prior. The company's Average Revenue per Membership (ARM) reported an increase of 1% year-over-year and in line with the company's expectations due to limited price increases over the last 18 months and price reductions in some countries in earlier quarters that were partially offset by price rises in the US, UK and France. Operating income for the quarter was $1.50 billion, up from $549.90 million last year. For the first quarter of fiscal 2024, the company expects revenue to come in at $9.24 billion, which reflects a 13% year-over-year growth.

Netflix, Inc. (NFLX) shares closed at $570.42, up 17% for the week.

Procter & Gamble Posts Earnings Report

The Procter & Gamble Company (PG) reported its second quarter earnings on Tuesday, January 23. The manufacturing company topped earnings expectations, causing its shares to rise by more than 4% following the release.

Procter & Gamble's net sales for the quarter were $21.44 billion. This was a 3% increase from $20.77 billion in net sales during the same quarter last year but below analysts' expectations of $21.48.

"We delivered strong results in the second quarter, enabling us to raise our core EPS growth guidance and maintain our top-line outlook for the fiscal year," said Procter & Gamble CEO, Jon Moeller. "We remain committed to our integrated strategy of a focused product portfolio of daily use categories where performance drives brand choice, superiority — across product performance, packaging, brand communication, retail execution and consumer and customer value — productivity, constructive disruption and an agile and accountable organization. The P&G team's execution of this strategy has enabled us to build and sustain strong momentum. We have confidence this remains the right strategy to deliver balanced growth and value creation."

The company reported net earnings of $3.47 billion or $1.40 per adjusted share for the quarter. This was down from net earnings of $3.93 billion or $1.59 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 an increase in net sales across all its segments, totaling to a 3% increase year-over-year. Organic sales increased by 4% compared to last year. The company attributed the increase in organic sales to higher pricing, which was partially offset by a decrease in shipment volumes. For fiscal year 2024, PG expects all-in-sales growth to be in the range of 2% to 4% and organic sales growth to be in the range of 4% to 5%.

The Procter & Gamble Company (PG) shares ended the week at $156.14, up 6% for the week.

3M Releases Earnings Report

3M (MMM) released its fourth quarter and full-year earnings report on Tuesday, January 23. 3M posted decreased sales for the quarter, resulting in its shares dropping over 12%.

Net sales for the quarter came in at $8.01 billion. This was slightly down from $8.08 billion during the same quarter last year but exceeded analysts' estimated quarterly sales of $7.69 billion. Sales for the full year returned at $32.68 billion.

"The fourth quarter capped a strong year for 3M," said 3M Chairman and CEO, Mike Roman. "Throughout 2023, we executed our priorities and delivered on our commitments – including expanding underlying operating margins and cash flow. We will continue to invest in high-growth markets where 3M's unique capabilities can make a difference, including automotive electrification, climate technology, and industrial automation. I am confident we will deliver a successful 2024."

3M posted net income of $945 million or $1.70 per adjusted shares for the quarter. Last year at this time, the company posted net income of $541 million or $0.98 per adjusted share. For the full year, the company reported a net loss of $7.0 billion.

The company's Safety and Industrial segment reported sales of $2.66 billion during the quarter, down from $2.74 billion during the same period the year prior. Sales in the Transportation and Electronics segment reached $2.09 billion, up from $2.06 billion one year ago. 3M's Health Care segment posted sales of $2.04 billon, a decrease from sales of $2.04 billion in 2022. The Consumer segment posted sales of $1.23 billion, a slight decline from $1.24 billion in the year prior. For fiscal 2024, 3M expects sales growth to be in the range of 0.25% to 2.25% and earnings per share to be between $9.35 and $9.75.

3M (MMM) shares ended the week at $95.99, down 12% for the week.

The Dow started the week at 37,920 and closed at 38,108 on 1/26. The S&P 500 started the week at 4,853 and closed at 4,891. The NASDAQ started the week at 15,393 and closed at 15,455.

Treasury Yields Vary

U.S. Treasury yields fluctuated throughout the week as investors assessed the latest economic data and its impact on the Federal Reserve's monetary policy decisions. Yields edged up Friday following the release of jobless claims data indicating a cooling of the labor market.

On Thursday, the U.S. Department of Commerce announced that gross domestic product (GDP), which measures the production of all U.S. goods and services, on an annualized basis rose 3.3% during the fourth quarter. This was above economists' expectations of a 2% increase but a retreat from the previous third quarter's GDP of 4.9%.

"The U.S. economy has shown remarkable resilience in the face of higher interest rates and soaring inflation, with consumer spending once again being a driver of GDP growth," said analyst of Hargreaves Lansdown, Sophie Lund-Yates. "This comes despite a stark burn-rate on excess savings and sharp jumps in the amount people are paying on personal loans, rather than mortgages. The U.S. public is absorbing far more shocks than expected, but that is not to say the storm will blow over without consequence."

The benchmark 10-year Treasury note yield opened the week of January 22 at 4.13% and traded as high as 4.20% on Thursday. The 30-year Treasury bond opened the week at 4.33% and traded as high as 4.42% on Thursday.

On Thursday, the U.S. Department of Labor reported that initial claims for unemployment increased by 25,000 to 214,000 for the week ended January 20. This was above analysts' expectations of 200,000 claims for the week. Continuing unemployment claims dropped by 27,000, reaching 1.83 million.

"The increase in unemployment across the country is reflective of a labor market that continues to cool," said global chief economist at Arch Capital Group, Parker Ross. "We expect a further gradual increase in the national unemployment rate in 2024, with risk of an acceleration higher if the Fed does not begin to normalize rates in the months ahead."

The 10-year Treasury note yield finished the week of 1/22 at 4.14%, while the 30-year Treasury note yield finished the week at 4.37%.

Mortgage Rates Increase

Freddie Mac released its latest Primary Mortgage Market Survey on Thursday, January 25. The survey showed the 30-year fixed mortgage rates increasing but remaining in the mid-6% range.

This week, the 30-year fixed rate mortgage averaged 6.69%, up from last week's average of 6.60%. Last year at this time, the 30-year fixed rate mortgage averaged 6.13%.

The 15-year fixed rate mortgage averaged 5.96% this week, up from last week's 5.76%. During the same week last year, the 15-year fixed rate mortgage averaged 5.17%.

"The 30-year fixed-rate has remained within a very narrow range over the last month, settling in at 6.69% this week," said Freddie Mac's Chief Economist, Sam Khater. "Given this stabilization in rates, potential homebuyers with affordability concerns have jumped off the fence back into the market. Despite persistent inventory challenges, we anticipate a busier spring homebuying season than 2023, with home prices continuing to increase at a steady pace."

Based on published national averages, the savings rate was 0.47% as of 1/16. The one-year CD averaged 1.86%.

Editor's Note: The publicly available financial information is offered as a helpful and informative service to our friends. This article is not an endorsement of any company, product or service.

Published January 26, 2024
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