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Boeing, Microsoft, Tesla earnings — What to know in markets Wednesday

Heidi Chung
Reporter

Earnings season continues to rage on with industrial heavyweights Caterpillar (CAT) and Boeing (BA) reporting quarterly results ahead of the opening bell, and tech behemoth Microsoft (MSFT) and electric carmaker Tesla (TSLA) rounding things out after the market close Wednesday.

Analysts are anticipating continued trouble in Caterpillar’s construction business and more pressure from the U.S.-China trade war when it reports earnings. Management’s comments on global growth and trade will be the focal points for investors. Caterpillar is expected to report adjusted earnings of $2.87 per share on $13.41 billion in revenue during its third quarter, according to analysts surveyed by Bloomberg.

Breaking down Caterpillar’s businesses, construction industries revenue is estimated to total $5.77 billion during Q3, while $2.86 billion in resource industries revenue is expected and energy and transportation revenue of $5.42 billion is estimated. Caterpillar shares have struggled this year and have fallen 8%, while the broader market rose 21% in the same time period.

Aerial photos showing Boeing 737 Max airplanes parked at Boeing Field in Seattle, Washington, U.S. October 20, 2019. Picture taken October 20, 2019. REUTERS/Gary He

Fellow industrial giant Boeing will face its moment of truth Wednesday when it delivers third-quarter financial results. Analysts expect that Boeing’s third quarter was significantly impacted, as fallout from the 737 Max deepens and CEO Dennis Muilenburg faces Congress next week. It is expected that until the 737 Max jets are able to fly again, Boeing’s financial performance will continue to be negatively impacted. Furthermore, the actual financial results are likely to be largely overlooked as questions surrounding when the 737 Max grounding will be lifted continue to plague the company.

The list of issues surrounding the 737 Max jets continues to grow. Tuesday, Boeing said that it conducted more than 800 flights with updated 737 Max software. The company also said that it conducted a “dry run” of a Max certification flight test last week. However, late Tuesday, Boeing announced that Kevin McAllister, head of the jetliner division, is stepping down and will be replaced by Stan Deal, head of Boeing’s global services business. Deal is someone with extensive sales and supplier-management experience and is seen as an executive that could help Boeing deal with one of the biggest crises in its more than 100 year history.

McAllister’s departure is the first high-level departure since the start of the 737 Max crisis. The news comes on the heels of an announcement on October 11 that Muilenburg would be stripped of his chairman title. Former General Electric exec David Calhoun will serve as non-executive chairman. It has been tough for Boeing investors as the stock faces immense pressure from the 737 Max fallout. Since the Ethiopian Air crash on March 10, the stock has tumbled more than 19%, while the Dow rose nearly 7% during the same time period.

Boeing is expected to report adjusted earnings of $2.17 per share on $19.65 billion in revenue during its third quarter. The options market is implying a 5.4% move in either direction following the results, which is higher than the 2.96% average move over the past four quarters.

Meanwhile, Microsoft and Tesla will garner attention when they report financial results after the market close.

Analysts are expecting another quarter of strong cloud demand when Microsoft reports fiscal first-quarter results. Growth in its core offering, Azure, is expected to fuel Microsoft’s Intelligent Cloud segment, though there could be a bit of deceleration. Microsoft and Apple have been neck and neck when it comes to being the world’s most valuable company. Both tech giants have a market cap over the key $1 trillion level.

Shares of the tech behemoth have been on a tear and rose 35% this year. Microsoft is expected to report adjusted earnings of $1.24 per share on $32.22 billion in revenue during its fiscal first quarter. The options market is implying a 4.3% move in either direction on its report.

Electric carmaker Tesla is expected to report an adjusted earnings loss of 24 cents per share on $6.45 billion in revenue during its third quarter. Tesla recently reported 97,000 vehicle deliveries in its third quarter and missed expectations for 100,000 deliveries. Analysts expect that there could be two reasons for the weak deliveries. First, Tesla could be facing a supply constraint due to having a single plant or just a lack of overall demand for vehicles.

In addition, Tesla’s planned expansion oversees could potentially face hurdles due to the ongoing trade war. The company has seen declining revenue per unit, and those issues are expected to have continued during the third quarter.

Other notable earnings reports scheduled for Wednesday include Anthem (ANTM), Eli Lilly (LLY), Vertex Pharma (VRTX), Thermo Fisher (TMO), Freeport-McMoran (FCX), Waste Management (WM) before market open; Ford (F), O’Reilly (ORLY), eBay (EBAY), Xilinx (XLNX), PayPal (PYPL), Las Vegas Sands (LVS) after market close.

Heidi Chung is a reporter at Yahoo Finance. Follow her on Twitter: @heidi_chung.

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