As tariffs create concerns about a global recession over the background of this week’s revenue season, Wall Street is requiring businesses to correct their guidance or, worse, pull it out completely.
Delta (DAL), the first airline with first-quarter results on Wednesday, did not affirm its full-year forecast, citing headwinds from economic uncertainty surrounding the trade war.
“They pulled out guidance. This means that everything depends on policy and companies can’t provide high conviction guidance, so I think we’ll see a lot this revenue season.”
Kantrowitz said first quarter performance will be “old news” for investors entering this revenue season as they try to assess how valuable the stock is. The market is “very low expectations” and is looking for early indications of the impact of tariff escalation on corporate revenues.
“The question of valuation is that if your revenue outlook is uncertain and if it’s literally more uncertain by that day, you can’t really trust that valuation,” Kantrowitz said.
In an interview with Ed Bastian, CEO of Yahoo Finance’s Delta Air Lines, he said, “The level of uncertainty that we have emerged from the world trade debate and skirmishes is a bit unprecedented.”
He said the company has “a pretty good look” for the next 60-90 days. But “beyond that, it’s a bit vague, and we are not responsible for trying to give estimates in light of such uncertainty.”
Meanwhile, on Wednesday morning, Walmart (WMT) reaffirmed its full-year profit outlook and first-quarter sales growth. However, the retail giant said the scope of its quarterly operating profit growth potential has expanded due to tariffs. The company did not specify how much money it would be, but in February it estimated an increase of 0.5% to 2%.
“The scope of the results of first quarter operating income growth was expanded due to a lower mix of categories, higher claims costs for victims, and desire to maintain flexibility in investing in prices as tariffs are implemented,” Walmart said in a press release Wednesday morning.
Retailer stocks rose 5% on Wednesday during market rebounds.
“What I’m looking for during the revenue season may not be what companies are saying and how these stocks behave, especially some of these few that have really been beaten in retail, or some of these areas that are actually covered in walls,” Keith Lerner, Head of Truist Co-Chief Investment Officer, told Yahoo Finance.
The story continues
