S&P 500 Earnings Overview: Monday May 11, 2020

A hotel, property company, and a Healthcare Giant are set to report earnings on Monday. The hospitality business has been hammered and the question for investors is whether the beating is priced into these stocks.

Marriot International Inc (MAR)

Marriot is scheduled to report Q1 financial results before the opening bell on Monday, and expectations are for a lousy quarter. The company provided March guidance describing revenue per available room (RevPAR) down substantial on a month over month basis. The only region that remained stable was China. Marriot believes that RevPAR will decline by 23% in Q1, with a decline of 20% in North America.

Marriot is expected to earn $0.95 per share down from $1.41 in the Q4. Analysts have a lower estimate by $0.13 over the past 30-days. Revenues are expected to come in near $4.059 million which would be a 19% decline year over year.

The Upshot is that the stock price has rebounded 70% since hitting a low of $50 per share in March, and is fairly valued. The company is likely to pull guidance and with Q2 nearly halfway complete it’s hard to see the company hitting any realistic 1-year target price of $98.

Simon Property Group (SPG)

SPG is scheduled to release Q1 financial results after the market closes. In April all the buzz was about fell tenants paying their bills. The financial results will likely show sharp drops in revenues. In the last reported quarter, the company outperformed, delivering a positive surprise. To make matters worse,  during the Q1, SPG purchased Taubman Centers TCO in a deal valued at $3.6 billion. The company is expected to report Q1 revenues at $1.63 billion, which would be a 3% year over year decline. SPG is expected to earn 1.63 per share.

The property management business is in a vulnerable spot, but they are fortunate the rates are near zero. The market is pricing in future poor performance and there is no reason to jump into this space.

Cardinal Health (CAH)

CAH is scheduled to report Q3 fiscal 2020 results on Monday before the opening bell. The company is in a prime spot to capitalize on the company’s medical which manufacture products such as single-use surgical drapes, gowns, and apparel, as well as surgical gloves. This personal protective gear was in high demand during the last quarter and should continue to generate strong revenue in the following quarter.

The company is expected to earn $1.43 per share on $36.95 billion in revenue. Earnings per share estimates have declined $0.03 over the last 30-days. Health care and medical equipment should continue to outperform the broader markets.