3 Earnings Reports to Watch Next Week

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earnings reports - 3 Earnings Reports to Watch Next Week

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In a choppy market, investors need to be nimble. Rising Treasury yields seemed to hit U.S. equities earlier this year, but even as those yields have pulled back after threatening the 3% level, the market has seemed more cautious than it has been since a major rally began in November 2016.

In the meantime, there’s not a ton of information coming from the market itself. Earnings season has ended, with a month to go until calendar first quarter reports start trickling in.

But the coming week actually has a few key earnings reports that could generate some fireworks. Indeed, these three earnings reports to watch will highlight investor attitudes toward important, and very different, slices of the market. A struggling consumer giant will try and jumpstart growth. With many similar companies struggling themselves, those results should show if there’s a path for the CPG (consumer packaged goods) sector to rebound.

Meanwhile, the biggest name in footwear reports. Its numbers, and strategy, will impact stocks in the battered retail space. And a semiconductor favorite will try to keep the long, impressive rally in that sector going. It may seem like the coming week will be quiet, but that’s actually not the case. There will be plenty for investors to focus on, and these three earnings reports should top the list.

Earnings Reports to Watch: General Mills (GIS)

Earnings Reports to Watch: General Mills (GIS)

Earnings Report Date: Wednesday, March 21 before market open

General Mills, Inc. (NYSE:GIS) simply needs to stem the bleeding. Growth has turned negative, thanks in large part to weakness in the North American business. Organic revenue still is guided flat to down 1% for fiscal 2018 (ending May) after declining 4% a year ago.

That’s simply not good enough, and it’s a key reason why General Mills has pulled back about 28% from 2016 highs. Last month, the company announced the acquisition of Blue Buffalo Pet Products Inc (NASDAQ:BUFF) in an effort to buy some growth. But investors weren’t particularly keen on that deal, and Blue Buffalo alone won’t be enough to turn General Mills around.

General Mills is going to need to drive that growth on its own, and it will be tough. The Yoplait yogurt business has lost substantial share to Greek yogurt products. Cereal demand is relatively weak, as parents in particular look for different options for their children. General Mills’ problems didn’t arrive in just a single quarter, and they won’t be fixed in a single quarter.

Still, some progress could help GIS stock, which at the moment is threatening a three-year low. And the reaction to General Mills earnings could give investors some clues as to investor sentiment toward the CPG space as a whole. Other major consumer-facing stocks like Procter & Gamble Co (NYSE:PG) themselves haven’t recovered from the sell-off last month. If GIS stumbles out of earnings, it may be a signal that investors no longer see large CPG plays as “safe” stocks — and aren’t willing to chase dividends as interest rates rise.

Earnings Reports to Watch: Micron Technology (MU)

Earnings Reports to Watch: Micron Technology (MU)

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Earnings Report Date: Thursday, March 22, after market close

For Micron Technology, Inc. (NASDAQ:MU), the story is very different. Micron stock has gone parabolic of late, climbing almost 50% just since early February. MU now trades at its highest level since the peak of the dot-com bubble back in early 2000.

So the question ahead of Thursday’s report is whether Micron can keep the momentum going. Clearly, expectations have risen — anything short of a blowout quarter could mean Micron stock will sink after the report. The recent run to $60 puts Micron stock right in line with the average Street target price. That too, suggests Micron needs a blowout quarter: analysts will need enough to revise their models, and target prices, higher.

Of course, recent performance suggests that if anyone can post that quarter, it’s Micron. The company has swamped consensus earnings and revenue estimates in the past five quarters. Memory prices in both NAND and DRAM remain relatively stable. And at under 9x forward earnings-per-share, there’s still room for those analysts to adjust their models and move fair value higher.

In short, I’d expect yet another beat from Micron on Thursday. But it’s going to take an absolutely monster quarter to keep the recent parabolic rally going.

Earnings Reports to Watch: Nike (NKE)

Earnings Reports to Watch: Nike (NKE)

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Earnings Report Date: Thursday, March 22, after market close

Nike Inc (NYSE:NKE) has a key report of its own on Thursday afternoon. The narrative surrounding NKE has changed notably over the past few months. Analysts and investors seemed extremely concerned about Nike’s growth, with NKE bouncing off multi-year support near $50 as recently as mid-October.

Since then, however, Nike stock has gained 30%, and the stock in fact made a new all-time high late last month. And that sets up an interesting — and potentially dangerous — report for Nike.

After all, the market is starting to price-in consistent growth again, with NKE trading at almost 25x forward EPS. But of late, Nike hasn’t posted that growth. Revenue rose just 4.5% last quarter, and margin pressure led Nike stock to actually sell off on the report. Nike needs better growth — and margins — to keep investor enthusiasm intact.

That might be tough, and any weakness from Nike will read across to the rest of the space. Investors in retailers like Foot Locker, Inc. (NYSE:FL), Finish Line Inc (NASDAQ:FINL) and Dicks Sporting Goods Inc (NYSE:DKS) will all be watching Nike’s results closely. They’ll be listening closely to the conference call as well, to see if Nike’s direct-to-consumer strategy will keep more product in-house.

Hilary Kramer is the editor of GameChangersBreakout StocksHigh Octane TraderAbsolute 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.


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