Watch these 2 stocks for big moves this week

The stock market has remained fairly strong in 2023 as it attempts to recover from its struggles in 2022. Even as banks’ earnings reports weighed heavily on the Dow Jones Industrial Average (^DJI -1.14%)the Nasdaq composite (^IXIC) managed to post another modest profit and losses for the S&P 500 (^GSPC -0.20%) were relatively small.


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Data source: Yahoo! Finance.

With stock markets mixed on Tuesday, many investors are looking forward to quarterly financial reports from some key players across industries. One of the most prominent reports this week comes from video streaming giant Netflix (NFLX -1.98%) and specialist in consumer products Proctor & Gamble (PG -0.29%).

Below, you’ll get a better idea of ​​why investors are keeping a close eye on these two companies and what to expect from their respective reports.

Time to watch the broadcast

Netflix will report its fourth-quarter financial results on Thursday after the closing bell. While the stock crashed sharply in the first half of 2022, it spent most of the year regaining much of its lost ground, and investors are hoping that what Netflix says about the just-closed quarter will continue to be positive. going fast.

Netflix impressed shareholders three months ago with its third-quarter report. While year-over-year revenue growth continued to slow and was even slightly lower than in the second quarter, Netflix returned to net subscription growth after several episodes of declining memberships.

Earnings fell slightly, but came in better than most expected. In addition, free cash flow picked up again and Netflix forecast to bring about 4.5 million new paid memberships in the fourth quarter.

More important than Netflix’s short-term numbers, however, are the trends the company sees in the streaming video business in general. Perhaps the most significant long-term impact could come from Netflix’s decision to offer an ad-supported tier, allowing it to keep monthly costs lower for price-sensitive subscribers. While the current ad environment is prone to macroeconomic disruptions, the long-term potential of streaming ads could be huge for Netflix.

Investors can expect a taste of what advertising has brought to the table in this quarter’s report, but the full impact probably won’t come for a few months. Nevertheless, you can expect a lot of attention for the Netflix report on Thursday evening.

P&G seems to be holding out

Consumer staples stocks have done a great job of defending against bear market declines, and Procter & Gamble has fallen only slightly from its highs. Nevertheless, investors are prepared to see at least some pressure on the company behind major brands like Tide and Pampers when it reports its second-quarter financial results before the opening bell on Thursday morning.

Most investors expect P&G’s quarterly earnings to be slightly lower than a year ago. Revenue is likely to fall about 1%, with earnings expected to take a slightly larger percentage drop to $1.59 per share.

Cost increases have squeezed Procter & Gamble’s margins, but arguably not as much as some other companies. P&G’s brand power gives it the pricing power to pass on some of its higher costs to consumers, and the company has also been a cash cow in the long run.

In general, investors will benefit from receiving reports from companies in two different but important sectors. With a more complete picture of consumer health, both in the US and abroad, it will be easier to get a sense of how the rest of the earnings season will play out.

Dan Caplinger does not hold a position in any of the listed stocks. The Motley Fool has positions in and recommends Netflix. The Motley Fool has a disclosure policy.