Markets have been surging higher most of the week, but are now cooling their heels to close out the week. For the year, the S&P 500 is pretty much where it left off last week, at 6%, while the Dow Jones Industrial Average, too, is sitting on 6% YTD gains. The Nasdaq, however, is up nearly 9% for the year.
Of the three reports to watch this week, only one of them managed to come out of earnings unscathed — Priceline Group Inc (NASDAQ:PCLN). Priceline wafted up 6.6% for the week as of this writing, while Acadia Pharmaceuticals Inc. (NASDAQ:ACAD) and 3D Systems Corporation (NYSE:DDD) both gave back 5% and 12.5%, respectively.
Earnings season is almost a wrap, but several big names are still on tap. Energous Corp (NASDAQ:WATT) and Ulta Beauty Inc (NASDAQ:ULTA) have been on a roll lately, while Express, Inc. (NYSE:EXPR) continues to roll off a cliff.
Will earnings next week change anything? Let’s take a look.
Earnings Reports to Watch: Energous (WATT)
Earnings Date: March 8
The tech world might be busy drooling over the Snapchat IPO — now trading as Snap Inc (NYSE:SNAP) — but Energous is a game-changing tech company, and one with a technology that at first glance seems to have more staying power.
Energous developed an award-winning wireless charging technology called WattUp that uses a radio frequency to deliver charging, much like a Wi-Fi router delivers internet. WATT stock went public in 2014 and moved sideways before exploding in 2016. Shares have more than doubled over the past year, its gains tallying a mouthwatering 122%. But great technology and even strong stock performance aren’t necessarily the same as a strong business model.
Looking at the fundamentals, WATT has missed on earnings in three out of the past four quarters, and has consistently lost money. For the most recent quarter, the results of which are due March 8, Energous is expected to lose 54 cents per share.
As long as the loss isn’t worse than expected and sales are strong, though, I expect Wall Street to continue accepting the bleed, much like it did for Amazon.com, Inc. (NASDAQ:AMZN) in the beginning.
Earnings Reports to Watch: Express (EXPR)
Earnings Date: March 8
Retailer Express has been moving clearly in the precise opposite direction; shares have been nearly halved since reaching a peak in early 2016. The stock dropped double-digits after its last earnings report, as its profit was not just cut in half year-over-year, but fell short of the analyst consensus. The company’s outlook was also unimpressive.
The good news is that Express has a shorter bar to hobble over when it reports earnings on March 8 as well. The bad news is that lower bar is made of an 11% decline in sales and a 56% decline in earnings. Three months ago, Wall Street anticipated a profit of 44 cents per share. Now, the Street is only expecting 29 cents per share.
Express has been beaten down to a forward price-earnings ratio of 12 and price-sales ratio of just 0.37. Meanwhile, even factoring in this year’s ugly decline, things are supposed to level out and begin expanding, with long-term earnings growth right around 12. I think we’ll see more selling before investors smell the value, though.
Earnings Reports to Watch: Ulta Beauty (ULTA)
Earnings Date: March 9
Ulta Beauty, the largest beauty retailer in the United States, has gained 65% over the past year and is on tap to report its quarterly earnings on March 9. Last report, Ulta posted same-store sales growth of 17%, overall sales growth of 24%, online sales growth north of 50% and net income growth of 23%.
The company beat earnings for the past twelve quarters, while estimates for all periods have been marching steadily higher in recent weeks. For the current quarter, earnings should grow 26%, while long-term growth should level out to 21%.
High momentum and expectations could serve as a nice base for an earnings beat. But ULTA is a bit pricey at these levels, so the slightest whiff could also send investors for the exits. Still, considering the market’s overall momentum right now, I’m bullish on ULTA pre-earnings.
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.