Most eyes have been on the White House this week, as Donald Trump pulled the United States from the Paris Climate Deal. Still, Wall Street hasn’t stopped chugging higher.
The S&P 500 Index tacked on another 2.3% even as the numbers showed job creation stalled in May. Earnings reports continue to trickle out, too.
I know I keep saying it, but we’re firmly in the final throes of the first-quarter earnings season. 99% of S&P 500 companies have reported earnings for Q1, with 75% beating on the bottom line and 64% besting sales estimates.
As we head into Q2, we’re seeing the smallest cuts to estimates since 2014, with Q2’s 2.5% EPS cuts besting the five- and ten-year averages of 3.5% and 4.2%, respectively.
But let’s not get ahead of ourselves. Take a look at three companies that have likely flew under your radar, but remain important indicators to keep an eye on as we finish out the season.
Earnings Reports to Watch: Ambarella (AMBA)
Ambarella Inc (NASDAQ:AMBA) shares have gained 40% over the past 12 months and nearly 10% this year alone, and that’s after the stock lost 9% in the past five days of trading alone.
A downgrade from Pacific Crest sent the semiconductor company sliding, with analysts citing the recent run combine with the fact that drone-maker DJI may not use the company’s technology in an upcoming release.
Ambarella reports earnings on June 6, though, and a positive report could put the downgrade in the rearview. Wall Street is expecting earnings of 36 cents per share — a figure that’s held steady over the past several months. Sales growth is slated to tally 11%, and while the earnings estimate only translates to 6% year-over-year growth, the company is on pace to expand earnings by 16% per year long term.
Still, such a growth rate is a bit less impressive when stacked next to the multiple AMBA stock sports even after the selloff. Shares are sitting at 23 times forward earnings. If there’s the slightest sign of weakness in the report, I expect more investors to take their profits and run.
Earnings Reports to Watch: Bazaarvoice (BV)
Bazaarvoice Inc (NASDAQ:BV) is a network that aims to connect retailers to the actual “voice” of their customers through analytics, reviews, advertising and curated content. While that may sound cool, it’s been a mostly downhill slide for BV stock since it hit the public market in 2012.
Still, investing is all about timing. Anyone who smelled a deal when the BV plummet began could have made around 18% in the past 12 months alone.
The company, while also reports on June 6, is expected to lose two cents per share on the back of a slight decline in earnings. But Bazaarvoice is apparently going to reach profitability this year, then multiply its earnings from one penny to six pennies by next year.
Impressed? I wouldn’t be. There’s little to no organic growth in sight for this company. If you’re going to bet on tech, there are countless better plays out there.
Earnings Reports to Watch: FuelCell Energy (FCEL)
FuelCell Energy Inc (NASDAQ:FCEL) reports earnings on June 8 and, while shares have been struggling of late, the stock gained 8% today alone.
The jump came not because Donald Trump pulled America out of the Paris Climate Deal, but because FuelCell announced a $3 million contract with the Advanced Research Projects Agency-Energy (a division of the U.S. Department of Energy).
If FuelCell reports strong earnings next week, it could keep the momentum going. Well, “strong” and “earnings” might be a bit of an overstatement for what would be a successful report. FCEL is slated to lose 27 cents per share on the back of a 33% decline in sales. The good news is that the loss is about half as bad as it was a year ago, and the company’s expected to keep shrinking its losses.
Still, profitability isn’t near on the horizon. I expect the excitement over this contract to wear off in the near future regardless of next week’s report.
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.
