The earnings calendar looks a bit light next week. Earnings season largely is over, with the biggest earnings reports in the rearview mirror. What looked like a solid performance has been offset by external concerns of late, pushing the S&P 500 to a two-week low.
The near-term risk to the market is that with another month-plus until Q3 earnings begin to roll in, those external concerns will dominate the headlines. And without a steady drumbeat of earnings reports to counter that bad news, the recent sell-off could continue.
Even with a thin earnings calendar, however, there are some key reports next week. None are likely to move the market — or offset any further political or macroeconomic concerns. But all three could impact important sectors — and could open opportunities for nimble traders.
3 Reports to Mark on Your Earnings Calendar: Kroger (KR)
Earnings Report Date: Thursday, September 13, before market open
Kroger (NYSE:KR) might have the most important report on the earnings calendar this week. KR stock has rallied nicely of late, and trades at an 18-month high. The fears of Amazon.com (NASDAQ:AMZN) wiping out margins in the grocery space have abated, at least for now, allowing KR to bounce over 60% from its 3-year low, reached about a year ago.
But it’s important to remember that Amazon hasn’t been KR’s only problem. KR stock did drop sharply after Amazon acquired Whole Foods last summer — but it plunged the day before, too, on weak earnings. Deflation has pressured supermarket operators across the company, and Kroger hasn’t been immune.
That seems to put a lot of pressure on the fiscal Q2 report on Thursday morning. Kroger not only needs to once again convince investors that it can survive the onslaught from Amazon and a resurgent Walmart (NYSE:WMT). It has to prove that it can protect its already narrow margins. I liked KR stock a year ago — but I’d be awfully cautious ahead of the Q2 report.
3 Reports to Mark on Your Earnings Calendar: Adobe (ADBE)
Earnings Report Date: Thursday, September 13 after market close
For Adobe Systems (NASDAQ:ADBE), the actual numbers in Thursday’s fiscal Q3 report aren’t likely to be all that newsworthy. Adobe hasn’t missed a single consensus estimate on the top or bottom line in four years. Given that the company clearly is firing on all cylinders, there’s little reason to see that trend changing.
What will be more interesting — for both ADBE and large-cap tech peers — is how the market reacts to more strong numbers. The broader question here is just what valuation the market is willing to assign to an admittedly attractive story. Few, if any, investors doubt Adobe’s strength as a business. But a 34x forward P/E multiple seems like it might be coming close to pricing in all but the most optimistic scenario.
I wrote last week that Workday (NASDAQ:WDAY) results this week raised a similar question. And WDAY stock fell over 9% on Wednesday despite a “beat and raise” quarter. If ADBE falls despite strong results, that might be a signal that the market’s seemingly endless optimism toward the tech space — and willingness to pay pretty much any price — is starting to be exhausted.
3 Reports to Mark on Your Earnings Calendar: Dave & Buster’s (PLAY)
Earnings Report Date: Friday, September 14, before market open
Last week, I called Dave & Buster’s (NASDAQ:PLAY) one of 7 restaurant stocks to watch. Friday’s fiscal Q2 report will help show if that call was correct.
It’s a reasonably important quarter for PLAY. The stock regained early-year highs quickly after dropping 40% when results disappointed. A better Q1 report sent the stock soaring, and it’s risen steadily since late July.
From a market standpoint, this certainly doesn’t seem like one of the most important releases on the earnings calendar. But it’s big for PLAY, and could give another data point on the health of the consumer. Retail and restaurant stocks have rallied nicely this year amid optimism toward rising spend. Dave & Buster’s is about as discretionary as it gets. And if the company posts a big Q2, it not only should lead PLAY stock higher, but perhaps suggest some optimism as investors look toward next earnings season.
As of this writing, Vince Martin has no positions in any securities mentioned.
