Six weeks into the second-quarter earnings season, Wall Street is now making a subtle transition from reviewing reports that confirm or contradict expectations about the past to evaluating the first concrete hints of what the current quarter will bring.
The numbers the following three companies deliver next week will set the fundamental tone through mid-October. As we head into September, the last echoes of the second-quarter cycle will get drowned out by the early reports on the current quarter. Barely 100 companies will file their 10-Q between now and September 26, when Nike Inc. (NYSE:NKE) fires up the next cycle.
As a result, once AMBA is on the board, the market will have practically all the fundamental cues it’s going to get for the next four weeks at least.
And with investors fixated on the most recent numbers as the most relevant to where Corporate America is now, these late results may be all it takes to swing the balance between bears and bulls.
Earnings Reports to Watch: Best Buy (BBY)
Best Buy Co Inc (NYSE:BBY) stunned traders three months ago by reporting 50% richer earnings than the models indicated. That accelerated growth trend is largely baked into expectations for Tuesday morning’s numbers, so I’m not counting on another instant 23% surge this time around.
Instead, we’re hunting evidence that at least some corners of the brick-and-mortar retail environment are thriving in a post-Amazon.com, Inc. (NASDAQ:AMZN) world. If BBY held its sales steady or even captured another 1%-2% in revenue over last year, it’s proof that smart competitors can survive.
And since the company’s quarter ran out at the end of July, we’re seeing the market share shift in something close to real time. It’s simple: any per-share earnings number above 61 cents keeps hope alive for the malls for another few months.
Earnings Reports to Watch: Box (BOX)
Box Inc (NYSE:BOX) has tricky targets to hit Wednesday night. The company is still burning cash and management have already steeled us to expect another earnings loss of 12 cents to 13 cents a share. But with these high-tech “unicorns,” it’s all about top-line growth.
This one could get tricky: the revenue models have crept 2.5% above BOX’s most optimistic guidance, so even if the analysts know this business better than the insiders, it’s going to take an even faster growth ramp to earn any real applause.
I’d avoid BOX at least until we hear the clapping. In the meantime, the conference call will refresh our sense of competition in the world of cloud storage.
Are rivals like Alphabet Inc (NASDAQ:GOOGL) exerting more or less pressure? Is management getting nervous about earlier-stage startups eating both companies’ lunch? Will Dropbox ever go public? These are the questions I’m looking to BOX to answer.
Earnings Reports to Watch: Ambarella (AMBA)
Ambarella Inc (NASDAQ:AMBA) wraps our earnings week up on Thursday night with the last big number of the cycle. This one’s all about reading shifts in the high-definition video processing industry, so get ready to connect all the pixels if you hear anything about automotive applications — AMBA cameras may one day become the “eyes” of cars — or competition from market heavyweights like Nvidia Corporation (NASDAQ:NVDA).
Any breath of recovery in consumer markets also spells good news brewing for noted partner GoPro Inc (NASDAQ:GPRO), where the quarter ended on June 30.
We’re weeks from those numbers now so a mid-quarter checkup will be welcome — GPRO and AMBA have swung big on each other’s headlines before, making both $1 billion charts punch well above their individual weight. We need earnings of 44 cents a share, but revenue above $72 million may be a relief.
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.