Meta, Alphabet and 10 under-the-radar media stocks expected to soar

The media landscape is going through a difficult transition, and it isn’t only because streaming is such a tricky business.

Companies such as Walt Disney Co.
DIS,
Warner Bros. Discovery Inc.
WBD
and Paramount Global
PARA
have made heavy investments in streaming services as their traditional media businesses wither, only to find that it is harder than it looks to emulate Netflix Inc.’s
NFLX
ability to make money from streaming.

Some of the companies are also saddled by debt, in part resulting from mergers that don’t hold the same shine in the current media landscape.

Needless to say, this is the age of cost-cutting for Netflix’s streaming competitors and many others in the broader media landscape.

Below is a screen of U.S. media stocks, showing the ones that analysts favor the most over the next 12 months. But before that, we list the ones with the highest and lowest debt levels.

All the above-mentioned media companies are in the communications sector of the S&P 500
,
which also includes Alphabet Inc.
GOOGL

GOOG
and Meta Platforms Inc.
META,
as well as broadcasters, videogame developers and news providers.

But there are only 20 companies in the S&P 500 communications sector, which is tracked by the Communications Services Select Sector SPDR ETF
.

High debt

Before looking at the stock screen, you might be interested to see which of the 53 media companies are saddled with the highest levels of total debt relative to consensus estimates for earnings before interest and taxes (EBIT) for the next 12 months, among analysts polled by FactSet. This may be especially important at a time when long-term interest rates have been rising quickly. Dollar amounts are in millions.

Company

Ticker

Debt/ est. EBIT

Total debt

Est. EBIT

Debt service ratio

Total return – 2023

Market cap. ($mil)

Dish Network Corp. Class A

DISH 1,245%

$24,556

$1,973

15%

-57%

$1,773

Madison Square Garden Sports Corp. Class A

MSGS 1,125%

$1,121

$100

-14%

-4%

$3,400

Paramount Global Class B

PARA 656%

$17,401

$2,654

-29%

-13%

$9,529

Consolidated Communications Holdings Inc.

CNSL 651%

$2,152

$331

-26%

6%

$441

TechTarget Inc.

TTGT 629%

$479

$76

16%

-36%

$788

Cinemark Holdings Inc.

CNK 616%

$3,630

$589

61%

81%

$1,908

Cogent Communications Holdings Inc.

CCOI 548%

$1,858

$339

-19%

27%

$3,388

E.W. Scripps Co. Class A

SSP 529%

$3,084

$583

80%

-42%

$552

AMC Networks Inc. Class A

AMCX 492%

$2,945

$599

26%

-29%

$357

Live Nation Entertainment Inc.

LYV 466%

$8,413

$1,805

135%

22%

$19,515

Source: FactSet

Click on the tickers for more about each company, including business profiles, financials and estimates.

Click here for Tomi Kilgore’s detailed guide to the wealth of information available for free on the MarketWatch quote page.

The debt figures are as of the end of the companies’ most recently reported fiscal quarters. The debt service ratios are EBIT divided by total interest paid (excluding capitalized interest) for the most recently reported quarters, as calculated by FactSet. It is best to see this number above 100%. Then again, these service ratios cover only one quarter.

Looking at the most indebted company by quarter-end debt to its 12-month EBIT estimate, it would take more than 10 years of Dish Network Corp.’s
DISH
operating income to pay off its total debt, excluding interest.

Shares of Dish have lost more than half their value during 2023, and the stock got booted from the S&P 500 earlier this year. The company has seen its satellite-TV business erode while it pursues a costly wireless build-out that won’t necessarily drive success in that competitive market. Dish plans to merge with satellite-communications company EchoStar Corp.
SATS
in a move seen as an attempt to improve balance sheet flexibility.

It is fascinating to see that for six of these companies, including Paramount, debt even exceeds the market capitalizations for their stocks. Paramount lowered its dividend by nearly 80% earlier this year as it continued its push toward streaming profitability, and Chief Executive Bob Bakish recently called the company’s planned sale of Simon & Schuster “an important step in our delevering plan.”

You are probably curious about debt levels for the largest U.S. media companies. Here they are for the biggest 10 by market cap:

Company

Ticker

Debt/ est. EBIT

Total debt

Est. EBIT

Debt service ratio

Total return – 2023

Market cap. ($mil)

Alphabet Inc. Class A

GOOGL 22%

$29,432

$133,096

711%

47%

$1,528,711

Meta Platforms Inc. Class A

META 47%

$36,965

$78,129

717%

137%

$634,547

Comcast Corp. Class A

CMCSA 266%

$102,669

$38,539

77%

33%

$187,140

Netflix Inc.

NFLX 197%

$16,994

$8,641

192%

41%

$184,362

T-Mobile US Inc.

TMUS 378%

$116,548

$30,838

32%

-5%

$156,881

Walt Disney Co.

DIS 263%

$47,189

$17,975

88%

-4%

$152,324

Verizon Communications Inc.

VZ 370%

$177,654

$48,031

36%

-11%

$140,205

AT&T Inc.

T 378%

$165,106

$43,681

31%

-20%

$100,872

Activision Blizzard Inc.

ATVI 93%

$3,612

$3,891

2159%

21%

$72,118

Charter Communications Inc. Class A

CHTR 434%

$98,263

$22,651

89%

23%

$62,380

Source: FactSet

Among the largest 10 companies in the S&P Composite 1500 communications sector by market cap, Charter Communications Inc.
CHTR
has the highest ratio of debt to estimated EBIT, while its debt service ratio of 89% shows it was close to covering its interest payments with operating income during its most recent reported quarter. Disney also came close, with a debt service ratio of 88%.

Charter Chief Financial Officer Jessica Fischer said at an investor day late last year that “delevering would only make sense if the market valuation of our shares fully reflected the intrinsic value of the cash-flow opportunity, if debt capacity in the market were limited or if our expectations of cash-flow growth, excluding the impact of our expansion were significantly impaired.”

Meanwhile, Kevin Lansberry, Disney’s interim CFO, said during the company’s latest earnings call that it had “made significant progress deleveraging coming out of the pandemic” and that it would “approach capital allocation in a disciplined and balanced manner.”

Disney’s debt increased when it bought 21st Century Fox assets in 2019, and the company suspended its dividend in 2020 in a bid to preserve cash during the pandemic.

When Disney announced its quarterly results on Aug. 9, it unveiled a plan to raise streaming prices in October. Several analysts reacted positively to the price increase and other operational moves.

Read: The long-simmering rumor of Apple buying Disney is resurfacing as Bob Iger looks to sell assets

The largest companies in the sector, Alphabet and Meta, have relatively low debt-to-estimated EBIT and very high debt-service ratios. Netflix has debt of nearly twice the estimated EBIT, but a high debt-service ratio. For all three companies, debt levels are low relative to market cap.

Low debt

Among the 52 companies in the S&P Composite 1500 communications sector, these 10 companies had the lowest total debt, relative to estimated EBIT, as of their most recent reported fiscal quarter-ends:

Company

Ticker

Debt/ est. EBIT

Total debt

Est. EBIT

Debt service ratio

Total return – 2023

Market cap. ($mil)

New York Times Co. Class A

NYT 0%

$0

$414

N/A

32%

$6,968

QuinStreet Inc.

QNST 18%

$5

$26

-153%

-35%

$513

Alphabet Inc. Class A

GOOGL 22%

$29,432

$133,096

711%

47%

$1,528,711

Shutterstock Inc.

SSTK 26%

$63

$241

39%

-20%

$1,502

Yelp Inc.

YELP 31%

$106

$344

78%

55%

$2,909

Meta Platforms Inc. Class A

META 47%

$36,965

$78,129

717%

137%

$634,547

Scholastic Corp.

SCHL 54%

$108

$201

319%

12%

$1,314

Electronic Arts Inc.

EA 73%

$1,951

$2,678

605%

-2%

$32,425

World Wrestling Entertainment Inc. Class A

WWE 93%

$415

$448

479%

66%

$9,455

Activision Blizzard Inc.

ATVI 93%

$3,612

$3,891

2159%

21%

$72,118

Source: FactSet

New York Times Co.
NYT
takes the prize, with no debt.

Wall Street’s favorite media companies

Starting again with the 52 companies in the sector, 46 are covered by at least five analysts polled by FactSet. Among these companies, 12 are rated “buy” or the equivalent by at least 70% of the analysts:

Company

Ticker

Share “buy” ratings

Aug. 25 price

Consensus price target

Implied 12-month upside potential

Thryv Holdings Inc.

THRY 100%

$21.11

$35.50

68%

T-Mobile US Inc.

TMUS 90%

$133.35

$174.96

31%

Nexstar Media Group Inc.

NXST 90%

$157.08

$212.56

35%

Meta Platforms Inc. Class A

META 88%

$285.50

$375.27

31%

Cars.com Inc.

CARS 86%

$18.85

$23.79

26%

Alphabet Inc. Class A

GOOGL 82%

$129.88

$150.04

16%

Iridium Communications Inc.

IRDM 80%

$47.80

$66.00

38%

News Corp. Class A

NWSA 78%

$20.74

$26.42

27%

Take-Two Interactive Software Inc.

TTWO 74%

$141.42

$155.96

10%

Live Nation Entertainment Inc.

LYV 74%

$84.79

$109.94

30%

Frontier Communications Parent Inc.

FYBR 73%

$15.24

$31.36

106%

Match Group Inc.

MTCH 70%

$43.79

$56.90

30%

Source: FactSet

News Corp.
NWSA
is the parent company of MarketWatch.

Finally, here are the debt figures for these 12 media companies favored by the analysts:

Company

Ticker

Debt/ est. EBIT

Total debt

Est. EBIT

Debt service ratio

Total return – 2023

Market cap. ($mil)

Thryv Holdings Inc.

THRY 227%

$433

$191

53%

11%

$730

T-Mobile US Inc.

TMUS 378%

$116,548

$30,838

32%

-5%

$156,881

Nexstar Media Group Inc.

NXST 358%

$7,183

$2,009

63%

-8%

$5,511

Meta Platforms Inc. Class A

META 47%

$36,965

$78,129

717%

137%

$634,547

Cars.com Inc.

CARS 223%

$451

$202

41%

37%

$1,253

Alphabet Inc. Class A

GOOGL 22%

$29,432

$133,096

711%

47%

$1,528,711

Iridium Communications Inc.

IRDM 306%

$1,481

$483

54%

-7%

$5,977

News Corp. Class A

NWSA 261%

$4,207

$1,611

109%

15%

$11,940

Take-Two Interactive Software Inc.

TTWO 272%

$3,492

$1,283

-40%

36%

$24,017

Live Nation Entertainment Inc.

LYV 466%

$8,413

$1,805

135%

22%

$19,515

Frontier Communications Parent Inc.

FYBR 453%

$9,844

$2,173

85%

-40%

$3,745

Match Group Inc.

MTCH 287%

$3,839

$1,337

540%

6%

$12,177

Source: FactSet

In case you are wondering about how the analysts feel about debt-free New York Times, it appears the analysts believe the shares are fairly priced at $42.60. Among eight analysts polled by FactSet, three rated NYT a buy, while the rest had neutral ratings. The consensus price target was $43.93. The stock trades at a forward price-to-earnings ratio of 27.7, which is high when compared with the forward P/E of 21.7 for the S&P 500
.

Source link

#Meta #Alphabet #undertheradar #media #stocks #expected #soar

Here’s everything coming to Amazon’s Prime Video in September 2023

Amazon’s Prime Video has high hopes for its September lineup, which includes the return of “The Wheel of Time” and a spinoff of “The Boys.”

After a two-year layoff, Season 2 of the sprawling fantasy epic “The Wheel of Time” (Sept. 1) picks up with Moraine (Rosamund Pike) and Rand (Josha Stradowski) now scattered and forced to regroup as the Dark One turns out to be far from defeated. Season 1 was one of Prime’s most-watched series ever, and Season 2 will reportedly be darker and more action-packed, spanning the second and third books of Robert Jordan’s series.

The end of the month will bring the premiere of “Gen V” (Sept. 27), set in “The Boys” universe and following a group of students with extraordinary abilities at a prestigious — and extremely competitive — college for superheroes-to-be. It looks every bit as depraved and violent as the massively popular “The Boys,” for better or worse.

Also see: What’s coming in September to Netflix | Hulu

Amazon’s
AMZN,
+1.08%

streaming service also has “Kelce” (Sept. 12), a feature documentary about Philadelphia Eagles All-Pro center Jason Kelce’s 2022-’23 season, which will serve as a prelude to the return of NFL Thursday Night Football (Sept. 14), which kicks off with the Eagles against the Minnesota Vikings.

Here’s the complete list of what else is coming to Prime Video in September (release dates are subject to change):

What’s coming to Prime Video in September 2023

Sept. 1

Spin City S1-6 (1997)
The Wheel of Time Season 2
10 Things I Hate About You (1999)
2001: A Space Odyssey (1970)
21 Grams (2004)
23:59 (2011)
A Bullet for Pretty Boy (1970)
A Force of One (1979)
A Man Called Sarge (1990)
A Matter of Time (1976)
A Rage to Live (1965)
Abbott and Costello Meet Frankenstein (1948)
After Midnight (1989)
Alakazam the Great (1961)
Alex Cross (2012)
All About My Mother (2000)
Amazons of Rome (1963)
American Ninja (1985)
American Ninja 2: The Confrontation (1987)
American Ninja 3: Blood Hunt (1989)
American Ninja 4: The Annihilation (1991)
Anaconda (1997)
And Your Name Is Jonah (1979)
Angel Eyes (2001)
Apartment 143 (2012)
April Morning (1988)
Arabian Nights (2000)
Are You in the House Alone? (2022)
Army of Darkness (1993)
As Above, So Below (2014)
Back to School (1986)
Bad Education (2020)
Bad News Bears (2005)
Bailout at 43,000 (1957)
Balls Out (2015)
Beer (1985)
Behind the Mask (1999)
Belly of an Architect (1990)
Berlin Tunnel 21 (1981)
Bewitched (2005)
Billion Dollar Brain (1967)
Blow (2001)
Body Slam (1987)
Born to Race (2011)
Bowling for Columbine (2002)
Boy of the Streets (1937)
Breakdown (1997)
Brides of Dracula (1960)
Brigadoon (1954)
Broken Embraces (2010)
Buster (1988)
Calendar Girl Murders (1984)
California Dreaming (1979)
Campus Rhythm (1943)
Captain Kidd and the Slave Girl (1954)
Carpool (1996)
Carry on Columbus (1992)
Carve Her Name With Pride (1958)
Chasing Papi (2003)
Cheerleaders Beach Party (1978)
Children of Men (2007)
Child’s Play (2019)
China Doll (1958)
Chrome and Hot Leather (1971)
Cocaine: One Man’s Seduction (1983)
Committed (2000)
Conan the Barbarian (2011)
Condor (1986)
Confidence Girl (1952)
Courage Mountain (1990)
Crossplot (1969)
Curse of the Swamp Creature (1966)
Curse of the Undead (1959)
Cycle Savages (1969)
Dagmar’s Hot Pants, Inc. (1971)
Damned River (1989)
Dancers (1987)
Danger in Paradise (1977)
Dangerous Love (1988)
Deep Blue Sea (1999)
Defiance (2009)
Deja Vu (2006)
Desert Sands (1955)
Desperado (1995)
Detective Kitty O’Day (1944)
Detective School Dropouts (1986)
Devil (2010)
Devil’s Eight (1969)
Diary of a Bachelor (1964)
Dogs (1977)
Don’t Worry, We’ll Think of a Title (1966)
Double Trouble (1992)
Down the Drain (1990)
Dr. Heckyl and Mr. Hype (1980)
Dracula (1931)
Drag Me to Hell (2009)
Driving Miss Daisy (1990)
Dust 2 Glory (2017)
Edge of Darkness (2010)
Eight Men Out (1988)
Eight on the Lam (1967)
Electra Glide in Blue (1973)
Elephant Tales (2006)
Europa Report (2013)
Evil Dead (2013)
Explosive Generation (1961)
Extraction (2015)
Face/Off (1997)
Fanboys (2009)
Fashion Model (1945)
Fatal Charm (1978)
Fearless Frank (1969)
Finders Keepers (2014)
Flight That Disappeared (1961)
Flight to Hong Kong (1956)
Fools Rush In (1997)
For the Love of Aaron (1994)
For the Love of It (1980)
For Those Who Think Young (1964)
Four Weddings and a Funeral (1994)
From Hollywood to Deadwood (1989)
Frontera (2014)
Fury on Wheels (1971)
Gambit (1967)
Ghost Story (1981)
Gigli (2003)
Grace Quigley (1985)
Grievous Bodily Harm (1988)
Hangfire (1991)
Haunted House (2023)
Hawks (1989)
Hell Drivers (1958)
Here Comes the Devil (2012)
Hollywood Harry (1986)
Honeymoon Limited (1935)
Hostile Witness (1969)
Hot Under the Collar (1991)
Hotel Rwanda (2005)
Hugo (2011)
I Am Durán (2019)
I Saw the Devil (2010)
I’m So Excited! (2013)
Inconceivable (2017)
Innocent Lies (1995)
Intimate Strangers (2006)
Invisible Invaders (1959)
It Rains in My Village (1968)
Jarhead (2005)
Jeff, Who Lives at Home (2011)
Joyride (2022)
Juan of the Dead (2012)
Kalifornia (1993)
Khyber Patrol (1954)
La Bamba (1987)
Labou (2009)
Lady in a Corner (1989)
Ladybird, Ladybird (1995)
Legally Blonde 2: Red, White and Blonde (2003)
Legend of Johnny Lingo (2003)
Little Dorrit (Part 1) (1988)
Little Dorrit (Part 2) (1988)
Little Sweetheart (1989)
Lost Battalion (1960)
Mama (2013)
Mandrill (2009)
Masters of the Universe (1987)
Matchless (1967)
Meeting at Midnight (1944)
Men’s Club (1986)
Mfkz (2018)
Midnight in the Switchgrass (2021)
Miss All American Beauty (1982)
Mission of the Shark (1991)
Mixed Company (1974)
Mystery Liner (1934)
National Lampoon’s Movie Madness (1983)
New York Minute (2004)
Nicholas Nickleby (2002)
Night Creatures (1962)
No (2012)
Observe and Report (2009)
Octavia (1984)
October Sky (1999)
Of Mice and Men (1992)
One Man’s Way (1964)
One Summer Love (1976)
Operation Atlantis (1965)
Overkill (1996)
Panga (1990)
Passport to Terror (1989)
Phaedra (1962)
Play Misty for Me (1971)
Portrait of a Stripper (1979)
Powaqqatsi (1988)
Predator: The Quietus (1988)
Private Investigations (1987)
Prophecy (1979)
Pulse (2006)
Quinceanera (1960)
Raiders of the Seven Seas (1953)
Red Dawn (1984)
Red Eye (2005)
Red Riding Hood (1988)
Red River (1948)
Reform School Girls (1969)
Riddick (2013)
Riot in Juvenile Prison (1959)
River of Death (1989)
Rocky (1976)
Rocky II (1979)
Rose Garden (1989)
Roxanne (1987)
Rumble Fish (1983)
Runaway Train (1985)
Running Scared (2006)
Safari 3000 (1982)
Season of Fear (1989)
Secret Window (2004)
Sense and Sensibility (1996)
Sergeant Deadhead (1965)
Seven Hours to Judgment (1988)
Sharks’ Treasure (1975)
She’s Out of My League (2010)
She’s the One (1996)
Sin Nombre (2009)
Sinister (2012)
Slamdance (1987)
Snitch (2013)
Son of Dracula (1943)
Space Probe Taurus (1965)
Spanglish (2004)
Spell (1977)
Stardust (2007)
Step Up (2006)
Sticky Fingers (1988)
Stigmata (1999)
Sugar (2009)
Summer Rental (1985)
Surrender (1987)
Sword of the Valiant (1984)
Tangerine (2015)
Tenth Man (1988)
The Adventures of Gerard (1978)
The Adventures of the American Rabbit (1986)
The Assisi Underground (1986)
The Bad News Bears (1976)
The Beast with a Million Eyes (1955)
The Birdcage (1996)
The Black Dahlia (2006)
The Black Tent (1957)
The Bourne Identity (2002)
The Bourne Legacy (2012)
The Bourne Supremacy (2004)
The Break-Up (2006)
The Cat Burglar (1961)
The Chronicles of Riddick (2004)
The Clown and the Kid (1961)
The Diary of a High School Bride (1959)
The Dictator (2012)
The Evictors (1979)
The Fake (1953)
The Family Stone (2005)
The Final Alliance (1990)
The Finest Hour (1991)
The Frog Prince (1988)
The Ghost in the Invisible Bikini (1966)
The Incredible 2-Headed Transplant (1971)
The Invisible Man (1933)
The Jewel of the Nile (1985)
The Late Great Planet Earth (1979)
The Legend of Zorro (2005)
The Little Vampire (2017)
The Living Ghost (1942)
The Locusts (1997)
The Machinist (2004)
The Manchu Eagle Murder Caper Mystery (1975)
The Manchurian Candidate (1962)
The Mask of Zorro (1998)
The Mighty Quinn (1989)
The Misfits (1961)
The Motorcycle Diaries (2004)
The Mouse on the Moon (1963)
The Mummy (1932)
The Naked Cage (1986)
The Night They Raided Minsky’s (1968)
The Possession (2012)
The Prince (2014)
The Program (1993)
The Ring (2002)
The Sacrament (2014)
The Savage Wild (1970)
The Secret in Their Eyes (2010)
The Sharkfighters (1956)
The Sisterhood of the Traveling Pants (2005)
The Spiderwick Chronicles (2008)
The Sum of All Fears (2002)
The Winds of Kitty Hawk (1978)
The Wolf Man (1941)
The Young Savages (1961)
Three Came To Kill (1960)
Three Kinds of Heat (1987)
Through Naked Eyes (1983)
Time Limit (1957)
To Catch a Thief (1955)
Tough Guys Don’t Dance (1987)
Track of Thunder (1967)
Transformations (1991)
Transporter 3 (2008)
Trollhunter (2011)
True Heart (1996)
Underground (1970)
Unholy Rollers (1972)
Unsettled Land (1989)
V/H/S (2012)
War, Italian Style (1967)
Warriors Five (1962)
We Still Kill the Old Way (1968)
When a Stranger Calls (2006)
Where the Buffalo Roam (1980)
Where the River Runs Black (1986)
Wild Bill (1995)
Wild Racers (1968)
Wild Things (1998)
Windows (1980)
Woman of Straw (1964)
Young Racers (1963)
Zack and Miri Make a Porno (2008)

Sept. 5
One Shot: Overtime Elite

Sept. 7
Single Moms Club (2014)

Sept. 8
Sitting in Bars with Cake

Sept. 12
Inside (2023)
Kelce

Sept. 14
Thursday Night Football

Sept. 15
A Million Miles Away

Wilderness

Written in the Stars

Sept. 19
A Thousand and One (2023)

Sept. 22
Cassandro (2023)

Guy Ritchie’s The Covenant (2023)

Sept. 26
The Fake Sheikh

Sept. 29
Gen V

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#Heres #coming #Amazons #Prime #Video #September

Big bank earnings in spotlight following historic failures: ‘Every income statement line item is in flux’.

JPMorgan Chase & Co.
JPM,
-0.11%
,
Citigroup Inc.
C,
+0.20%

and Wells Fargo & Co.
WFC,
+2.74%

— along with PNC Financial Services Group Inc.
PNC,
+0.37%

and BlackRock Inc.
BLK,
+0.05%

— report earnings Friday as Wall Street’s fixation on a recession continues to run deep. And following the implosion of Silicon Valley Bank
SIVBQ,
-12.21%
,
Signature Bank
SBNY,
+3.97%

and Silvergate Bank
SI,
-2.72%
,
along with efforts to seal up cracks in First Republic Bank
FRC,
+4.39%

and Credit Suisse Group AG
CS,
+1.27%
,
Wall Street is likely to review quarterly numbers from the industry with a magnifying glass.

“Every income statement line item is in flux and the degree of confidence in our forecast is lower as the probability of a sharper slowdown increases,” Morgan Stanley analyst Betsy Graseck said in a note on Wednesday.

For more: Banks on the line for deposit flows and margin pressure as they reel from banking crisis

She said that the collapse of Silicon Valley Bank and Signature Bank last month would trigger an “accelerated bid” for customers’ money, potentially weighing on net interest margins, a profitability gauge measuring what banks make on interest from loans and what they pay out to depositors. Tighter lending standards, she said, would drive up net charge-offs — a measure of debt unlikely to be repaid — as borrowers run into more trouble obtaining or refinancing loans.

Phil Orlando, chief investment strategist at Federated Hermes, said in an interview that tighter lending standards could constrain lending volume. He also said that banks were likely to set aside more money to cover loans that go bad, as managers grow more conservative and try to gauge what exposure they have to different types of borrowers.

“To a significant degree, they have to say, what percentage of our companies are tech companies? What percentage are financial companies? Do we think that this starts to dribble into the auto industry?” he said. “Every bank is going to be different in terms of what their portfolio of business looks like.”

He also said that last month’s bank failures could spur more customers to open up multiple accounts at different banks, following bigger concerns about what would happen to the money in a bank account that exceeded the $250,000 limit covered by the FDIC. But as the recent banking disturbances trigger Lehman flashbacks, he said that the recent banking failures were the result of poor management and insufficient risk controls specific to those financial firms.

“COVID was something that affected everyone, universally, not just the banking companies but the entire economy, the entire stock market,” he said. “You go back to the global financial crisis in the ’07-’09 period, that’s something that really affected all of the financial service companies. I don’t think that’s what we’re dealing with here.”

Also read: Banking sector’s growing political might could blunt reform in wake of SVB failure, experts warn

JPMorgan
JPM,
-0.11%

Chief Executive Jamie Dimon has said that Trump-era banking deregulation didn’t cause those bank failures. But in his annual letter to shareholders last week, he also said that the current turmoil in the bank system is not over. However, he also said that the collapse or near-collapse of Silicon Valley Bank and its peers “are nothing like what occurred during the 2008 global financial crisis.”

“Regarding the current disruption in the U.S. banking system, most of the risks were hiding in plain sight,” Dimon said. “Interest rate exposure, the fair value of held-to-maturity (HTM) portfolios and the amount of SVB’s uninsured deposits were always known — both to regulators and the marketplace.”

“The unknown risk was that SVB’s over 35,000 corporate clients – and activity within them – were controlled by a small number of venture capital companies and moved their deposits in lockstep,” Dimon continued. “It is unlikely that any recent change in regulatory requirements would have made a difference in what followed.”

The Federal Reserve’s decision to raise interest rates, along with a broader pullback in digital demand following the first two years of the pandemic, stanched the flow of tech-industry funding into Silicon Valley bank and caused the value of its bond investments to fall.

Don’t miss: An earnings recession seems inevitable, but it might not last long

But the impact of those higher interest rates — an effort to slow the economy and, by extension, bring inflation down — will be felt elsewhere. First-quarter earnings are expected to decline 6.8% for S&P 500 index components overall, according to FactSet. That would be the first decline since the second quarter of 2020, when the pandemic had just begun to send the economy into a tailspin.

“In a word, earnings for the first quarter are going to be poor,” Orlando said.

This week in earnings

For the week ahead, 11 S&P 500
SPX,
+0.36%

components, and two from the Dow Jones Industrial Average
DJIA,
+0.01%
,
will report first-quarter results. Outside of the banks, health-insurance giant UnitedHealth Group
UNH,
+0.70%

reports during the week. Online fashion marketplace Rent the Runway Inc.
RENT,
+3.75%

will also report.

The call to put on your calendar

Delta Air Lines Inc.: Delta
DAL,
+0.69%

reports first-quarter results on Thursday, amid bigger questions about when, if ever, higher prices — including for airfares — might turn off travelers. The carrier last month stuck with its outlook for big first-quarter sales gains when compared with prepandemic levels. “If anyone’s looking for weakness, don’t look at Delta”, Chief Executive Ed Bastian said at a conference last month.

But rival United Airlines Holdings Inc.
UAL,
+1.50%

has told investors to prepare for a surprise loss, even though it also reported a 15% jump in international bookings in March. And after Southwest Airlines Co.’s
LUV,
+0.03%

flight-cancellation mayhem last year brought more attention to technology issues and airline understaffing, concerns have grown over whether the industry has enough air-traffic controllers, prompting a reduction in some flights.

For more: Air-traffic controller shortages could result in fewer flights this summer

But limitations within those airlines’ flight networks to handle consumer demand can push fares higher. And Morgan Stanley said that strong balance sheets, passengers’ willingness to still pay up — albeit in a concentrated industry with a handful of options — and “muscle memory” from being gutted by the pandemic, could make airlines “defensive safe-havens,” to some degree, for investors.

“It is hard to argue against the airlines soaring above the macro storm underneath them (at least in the short term),” the analysts wrote in a research note last week.

The numbers to watch

Grocery-store margins: Albertsons Cos.
ACI,
+0.53%
.
— the grocery chain whose merger deal with Kroger Inc.
KR,
+0.96%

has raised concerns about food prices and accessibility — reports results on Tuesday. Higher food prices have helped fatten grocery stores’ profits, even as consumers struggle to keep up. But Costco Wholesale Corp.
COST,
-2.24%
,
in reporting March same-store sales results, noted that “year-over-year inflation for food and sundries and fresh foods were both down from February.” The results from Albertsons could offer clues on whether shoppers might be getting a break from steep price increases.

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