What’s at Stake for Warren Buffett This Earnings Season

Earnings season has arrived, and everyone is paying attention – including, of course, Warren Buffett.

Earnings season has arrived, and everyone is paying attention – including, of course, Warren Buffett.

The billionaire at the wheel of Berkshire Hathaway will be watching closely in the weeks to come as his investment picks reveal how they’ve been doing lately. The events are likely to put him in the news, too. It wouldn’t be the first time a slipup or surprise from companies like IBM (NYSE:IBM) and Coca-Cola (NYSE:CO) has put Buffett in the headlines, declaring he has gained or lost a billion dollars on a one pick in a single day.

Thus far this earnings season, Warren Buffett’s stocks are doing fairly well.

Goldman Sachs (NYSE:GS) topped analysts’ expectations with its report, as did Wells Fargo (NYSE:WFC). American Express (NYSE:AXP) beat estimates on profit and EPS but missed the mark slightly on revenue. IBM exceeded earnings expectations with its Monday report, but revenue fell short as a result of the strong dollar.

Here’s a look at what else Warren Buffett has at stake – and what he’ll be keeping his eye on – as earnings season unfolds.

Coca-Cola

Slated to report quarterly earnings before market open on Wednesday, April 22nd, Coca-Cola is always one to watch. But with its most recent reports, the beverage giant hasn’t exactly been a top performer.

Coca-Cola missed its 2014 profitability targets. In the last quarter of the year, its earnings fell 55%, taking a hit on currency fluctuations, charges related to its Venezuelan operations and the impact of selling off some of its bottle operations in North America. “We remain resolutely focused on accelerating growth and taking advantage of opportunities to solidify our position in key markets and categories,” company CEO Muhtar Kent said in a statement at the time.

Coke whiffed it on its third quarter earnings as well, posting adjusted diluted earnings per share of $0.48 on revenues of $11.98 billion, down from $0.53 and $12.03 billion reported the same period the year prior.

This time around, Coca-Cola is expected to post earnings of $0.43 per share on $10.65 billion for the most recent quarter – a slight decline from the same period a year ago. With 400 million KO shares in his portfolio, Warren Buffett will surely be watching.

Walmart

Investors will have to wait a while on Walmart (NYSE:WMT), which will reveal its latest quarterly numbers on May 19th. According to Zacks Investment Research, the consensus EPS is $1.03, down from $1.13 during the same period a year ago.

Walmart’s February report was solid and exceeded expectations, though its outlook, to some, seemed cautious. “Like many other global companies, we faced significant headwinds from currency exchange rate fluctuations, so I’m pleased that we delivered fiscal year revenue of $486 billion,” CEO Doug McMillan said. “But, we’re not satisfied.”

The company’s latest earnings report also came with the announcement of a wage increase for employees. It said approximately 500,000 full-time and part-time associates at Walmart and Sam’s Clubs stores would receive a pay bump to $9.00 per hour by April and would be making $10.00 an hour by February 2016.

The immediate impact of the wage increase on earnings, if any, will be revealed in May.

General Motors

General Motors (NYSE:GM) will report earnings before market open Thursday, April 23rd, and is expected to post $0.96 EPS according to Thomson-Reuters. Revenue growth is forecasted to be modest.

With a 41-million-share GM stake in his portfolio as the end of Q4, Warren Buffett will be interested in the automaker’s numbers. But he isn’t the only billionaire on the lookout.

David Tepper’s Appaloosa Management was part of a group of hedge funds that backed Harry Wilson’s successful push for a stock buyback. And David Einhorn revealed in a letter to investors that his firm, Greenlight Capital, has hopped back into the GM game.

By Einhorn’s estimates, 2015 is shaping up well for General Motors:

2015 should be a better year for GM: the company is a year closer to eliminating its losses in Europe; low gas prices should stimulate demand for its highly profitable SUV and light truck product lines; raw material costs are low; and we believe that the worst of the product recalls is finally behind them. Finally, GM has acknowledged it might not need quite so much cash lying around earning zero interest, and it will begin to buy back shares shortly.

Thursday’s earnings announcement will be a first indicator of whether David Einhorn’s assessment is correct.

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