The markets have shown some weakness in recent days, but overall, have performed well so far in 2017, booking 6% gains in just over two months and boasting an 18% climb over the last year.
That’s not to say there aren’t risks to bull market, which recently hit its eight-year anniversary on March 8, as the Federal Reserve meets next week with expectations of a rate hike.
There’s also political uncertainty settling a general uneasiness in the markets after President Trump levied unsubstantiated wiretapping allegations against his predecessor, President Barack Obama. And while the slate of earnings reports is running dry, with many of the big names already having reported earnings, several companies are still slated to release their numbers in the next week.
Here’s who you should watch.
Earnings Reports to Watch: Oracle (ORCL)
Earnings Date: March 15
Tech behemoth Oracle Corporation (NYSE:ORCL) has gained more than 10% so far this year, nearly double the broader market’s already-impressive gains. The gains could continue next week, as Oracle’s third-quarter earnings report is due on March 15.
For the most recent quarter, the company expects around 3% sales growth, while the bottom line is expected to contract by about the same amount. While an earnings beat is important, so are trends. Investors will be keeping a close eye on the company’s cloud trends, as Oracle has been undergoing a transformation towards SaaS. If that transition looks to be chugging along, I expect investors will be pleased.
Oracle beat earnings last quarter, remedying two straight misses. Longer term, too, growth is expected. Next year, earnings are expected to grow by 9%, while that’s also the average for the next half-decade — quite an improvement from the flat trend of the past five years.
Earnings Reports to Watch: Adobe (ADBE)
Earnings Date: March 16
Adobe Systems Incorporated (NASDAQ:ADBE) has also been undergoing a transition, shifting from a proprietary model to a subscription one. That’s been underway for some time, though, and has been going quite well, with ADBE stock gaining 16% in 2017 and 40%-plus over the past 12 months.
When Adobe releases earnings next week, it’s expected to post year-over-year earnings growth near 32% on the back of nearly 20% sales growth — not bad for a tech company that’s been around the block. Adobe also has a strong streak of topping Wall Street’s consensus.
Sometimes, strong stock performance can make earnings risky. A stock that’s trading at a premium and that shows any sign of weakness is susceptible to a selloff. But Adobe stock, despite its outperformance over the past year, isn’t frothy.
Shares are trading for 24 times forward earnings, while long-term earnings growth is slated for around 30%.
Earnings Reports to Watch: Tiffany (TIF)
Earnings Date: March 17
The third stock on our list has been just as solid. Luxury retailer Tiffany & Co. (NYSE:TIF) has gained 14% so far this year and 25% over the past 12 months.
But the numbers on-tap for the current quarter aren’t quite as mouth-watering as those for Adobe. Tiffany’s earnings consensus has been shrinking over the past few weeks, with a 5% decline currently expected on the back of more or less flat sales.
The silver lining is that Tiffany did soar over its earnings bars the last two quarters, posting double-digit percentage beats. The trouble is that TIF stock is looking a bit frothy after its run, trading at over 22 times forward earning despite single-digit long-term growth.
As a result, the slightest softness, whether on the top or bottom line, could be enough for investors to want to pocket their gains and head for the door.
Hilary Kramer is the editor of GameChangers, Breakout Stocks, High Octane Trader, Absolute Capital Return and Value Authority. She is an accomplished investment specialist and market strategist with more than 25 years of experience in portfolio management, equity research, trading, and risk management. She has extensive expertise in global financial management, asset allocation, investment banking and private equity ventures, and is regularly sought after to provide her analysis on Bloomberg, CNBC, Fox Business Network and other media.
