While the meat of earnings season is behind us, there are a number of big consumer names left to watch — including Walt Disney Co (NYSE:DIS), Electronic Arts Inc.(NASDAQ:EA) and Macy’s Inc. (NYSE:M), just to name a few.
Considering the power of the American consumer right now and the need for U.S. shoppers to keep spending to fuel continued momentum for the stock market, even if you don’t own any of these names, you should pay attention.
And heck, you should also be looking at these companies, anyway. There are a few stocks in this list that have attractive valuations and a decent chance of an earnings surprise this week.
Take a look and see for yourself:
Disney earnings
Expected to Report: Tuesday, May 10 (PM)
The film division of entertainment giant Walt Disney Co (NYSE:DIS) has had a blockbuster run lately, riding not just the Star Wars: Episode VII release and licensing cash but more recently also kids hits Zootopia and Jungle Book.
I expect a big beat as a result of this success at the box office; however, investors still are rightly worried about ESPN revenue and the whole “death of cable” thing so that is not going to be the real story going forward.
I’m optimistic because the company is still pretty fairly valued with a forward price-to-earnings ratio of about 17; a year ago, Disney was pretty frothy on all the Star Wars and Marvel hype, but now it seems like a decent bet for investors given recent momentum and a cooling in its share price.
Electronic Arts earnings
Expected to Report: Tuesday, May 10 (PM)
Electronic Arts Inc. (NASDAQ:EA) and its strong games portfolio continues to win over investors, and with continued success in mobile with titles like Star Wars Galaxy of Heroes and the rumor mill rumbling about new Xbox hardware out this year as a catalyst to boost game sales, there seems to be a lot of confidence the company’s recent successes have not been a fluke that will fade.
Sure, EA had a killer 2015 and the stock soared 40% last year, but don’t count this company out. Alongside decent growth plans via new titles, EA has a big portfolio of legacy brands like Madden and Battlefield — as well as a pretty fair earnings multiple given recent successes.
I’m cautiously optimistic.
Shake Shack earnings
Expected to Report: Thursday, May 12 (PM)
Honestly, how is Shake Shack Inc (NYSE:SHAK) even still a thing for investors? It’s off 50% in the last year but still has a forward P/E of like 70. Sure, 20% revenue growth is nice … but opening new restaurants at a good clip will do that for a small company.
I have no idea what is attractive about this investment. It was priced at $21, and that feels right.
I never understood the instant premium or the 2015 run-up with growth metrics that are, frankly, not all that impressive for a small-cap consumer stock in aggressive expansion mode.
Fossil earnings
Expected to Report: Tuesday, May 10 (PM)
Poor Fossil Group Inc (NASDAQ:FOSL). Six or seven years ago, it was a brand people cared about. Now, Michael Kors Holdings Ltd (NYSE:KORS) et al have pushed it to the discount rack.
The stock is pretty fairly valued and the company has a history of hitting its numbers, but sadly there just isn’t enough growth or momentum here for me to have faith.
Revenue is basically expected to be flat the next two years, so don’t read too much into February’s earnings party … the pop we saw there was short-lived.
But who knows? Short interest has crept up again, so maybe there’s a swing trade. Just don’t depend on FOSL doing well consistently in the weeks after earnings.
Macy’s earnings
Expected to Report: Wednesday, May 11 (AM)
Disclosure: I personally own Macy’s, Inc. (NYSE:M), so that may cloud my judgement here. But if you’re interested, I like Macy’s on cost cutting and low expectations.
The company beat big last quarter — after, of course, low-balling estimates in late 2015 to make sure Wall Street wasn’t looking for much. Cuts to capex and store closures could provide a short-term boost to financials, and an almost exclusively U.S. focus will keep any forex issues at bay.
All this said, I have a hair trigger on this play since Macy’s still needs to figure out e-commerce and its omnichannel approach … or else it will close stores and cut capex, losing customers in brick-and-mortar but not replacing revenue elsewhere.
Nordstrom earnings
Expected to Report: Thursday, May 12 (PM)
Nordstrom, Inc. (NYSE:JWN) has had a rough go lately in regards to earnings, and shares have suffered as a result.
I think investors had a little too much confidence in this retailer and the theoretical strength of its upscale stores, and that unrealistic optimism is now resetting.
The valuation is better after a recent slump in share price, but the poor track record across its past two earnings reports and big declines in the past six months or so make me reluctant to catch a falling knife this time around.
JCPenney earnings
Expected to Report: Friday, May 13 (AM)
Back in January, I said to myself, “You know, J C Penney Company Inc (NYSE:JCP) has a good valuation and nobody expects anything from this dog. I bet it bounces off the bottom.”
And, of course, I didn’t buy it … and it bounced big this spring.
The problem, however, is that the short-lived pop we saw after a big beat is not really repeatable, and it’s highly unlikely that JCP has rejuvenated its brand just yet. Revenue is flat, so a lot of the recovery has been thanks to cost cutting — and a recent report that the company is panicking over a spring slowdown, slashing overtime and pinching every penny possible, is not a good sign that the company can sustain its performance or that it has the right mentality about how to reliably grow and prosper going forward.
The fact that JCP reports on Friday the 13th is not exactly a good sign.
Jeff Reeves is the editor of InvestorPlace.com and the author of The Frugal Investor’s Guide to Finding Great Stocks. Write him at editor@investorplace.com or follow him on Twitter via @JeffReevesIP. As of this writing, he was long M.
