Cash is king as U.S. quarterly reporting season gains steam

By Noel Randewich

(Reuters) – As the U.S. quarterly earnings season picks up steam next week, investors will get an early glimpse of how companies are weathering the coronavirus outbreak, including the strength of their balance sheets.

Reports from major corporations including International Business Machines , Coca-Cola and Union Pacific will reflect the initial effects of the crisis in the United States, and investors will pay close attention to their liquidity and ability to weather a steep economic downturn caused by the COVID-19 pandemic.

With little clarity on when the U.S. economy will reopen, companies of all sizes have been bracing for months of limited revenues.

At least 13 S&P 500 companies have cut or suspended their dividends, while several corporations have slowed capital spending and cut jobs and wages to save money.

Companies have also raced to raise as much credit as possible and preserve liquidity. AT&T , which reports its results on April 22, recently announced a $5.5 billion term-loan agreement to provide “financial flexibility”, and last month it shuttered 40% of its stores nationwide as a result of the health crisis.

Major airlines, including JetBlue Airways Corp , Southwest Airlines Co and Alaska Air Group Inc , which all report in coming days, have said they would accept U.S. government aid to help them ride out the sharp drop in travel demand caused by the massive lockdowns.

The following graphic shows companies reporting in the week of April 20, along with their cash and short-term investments in recent quarters.

Graphic – Who’s got cash?: https://fingfx.thomsonreuters.com/gfx/mkt/qzjpqlzmvxm/Who%20has%20cash.png

(Reporting by Noel Randewich; editing by Jonathan Oatis)