Investors have a lot to pay attention to, with the Federal Reserve announcing a slight hike in rates and Donald Trump announcing his budget, which increases defense spending but cuts a number of agencies to the bone.
But while macro trends are obviously important, investors shouldn’t miss out on the still-running train of the fourth-quarter earnings season.
Many of the companies that have yet to report still can say a lot about how the next few months will pan out for their respective industries. In this case, we’re talking about the volatile retail industry, as well as red-hot tech stocks.
Here’s a look at three earnings reports that every investor should keep an eye on next week:
Earnings Reports You Should Watch: Nike (NKE)
Earnings date: March 20 (p.m.)
So far this year, Nike Inc (NYSE:NKE) has gained 13%, double the broader market and quite an improvement from the stock’s 19% decline last year. Will the run continue with a strong earnings report next week?
Nike is one of the last retail earnings reports of the season, and for the most recent quarter, NKE is expected to earn 53 cents per share — two pennies less than last year’s tally. That decline is expected to come despite an expansion of 5% on the top line.
Historically, Nike is quite solid at playing the expectations game. It has beaten Wall Street’s consensus in each of the last four quarters. Nike also just suffered a slight dip; the stock hit $58 before dipping slightly and then recovering back to that mark. I’m hopeful any investors bitter about last year’s losses have been weeded out and replaced by those who are confident in Nike’s forward-looking prospects.
Indeed, Nike is slated to post 12% annual earnings growth over the next half-decade. Plus, it authorized a four-year, $12 billion buyback authorized in November 2015, while its dividend yields 1.3% despite this year’s run.
An earnings beat and solid forecast should be enough to keep the run going.
Earnings Reports You Should Watch: Gamestop (GME)
Earnings date: March 22 (p.m.)
Speaking of dividends, GameStop Corp. (NYSE:GME) is a head-turner in that arena; its current yield is over 6%. This is in part because Gamestop stock has been moving steadily lower since a peak in 2013. It instituted the dividend a few quarters ago and has already bumped it from 37 cents to 38 cents. There are definite question marks about its sustainability considering Gamestop revenue is shrinking, but right now it’s only 40% of earnings. Not a huge red flag.
Gamestop’s earnings are expected to shrink for the most recent three months, but the longer-term outlook is at least in the black. Growth of 7% is on tap over the next five years — not too bad considering the stock is trading for a lower multiple.
While Gamestop is a decent value play, I worry that investors will head for the hills at the slightest sign of trouble. I’d prefer an outsize yield from a steadier business than brick-and-mortar video game sales.
Earnings Reports You Should Watch: Micron (MU)
Earnings date: March 23 (p.m.)
Semiconductor company Micron Technology, Inc. (NASDAQ:MU) has also been on fire this year, gaining almost 20% since Jan. 1.
Micron’s year-over-year results — among the last earnings reports of the tech sector — are going to be impressive next week (hopefully), as this quarter last year was unprofitable but an 84-cent profit is expected this go-round. That’s thanks to sales growth of nearly 60%.
Heck, that estimate is huge even compared to Wall Street’s hopes a few months ago. Go back 90 days, and the consensus was for just 38 cents per share. That upward trend holds for this full year and next. Respectively, earnings estimates have gone from $1.64 to $2.96 for this year, and from $2.09 to $3.43 for next.
Micron has also been recovering since a big-time peak in late 2014, but it’s been steady sailing higher since a bottom was reached early last year. I expect next week’s earnings to draw even more attention to Micron’s growth and momentum, propelling shares higher.
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.
