Tough week for retailers. Big earnings misses by Walmart (NYSE:WMT), Target (NYSE:TGT) and Kohl’s (NYSE:KSS) left investors reeling and contributed to a steep selloff across stock markets, including the biggest one-day drop in two years on May 18.
Wall Street will be looking for better results in the week ahead as we get first quarter prints from the last of the major retailers left to report, as well as some notable technology companies.
Taken together, the earnings reports in coming days should provide more evidence of how the consumer and economy are holding up as inflation continues to run at a 40-year high and the Federal Reserve prepares to raise interest rates at its next meeting on June 14 and 15. Here are seven stocks reporting earnings the week of May 23:
- Best Buy (NYSE:BBY)
- Petco (NASDAQ:WOOF)
- Nvidia (NASDAQ:NVDA)
- Dick’s Sporting Goods (NYSE:DKS)
- Snowflake (NYSE:SNOW)
- Alibaba (NYSE:BABA)
- Costco (NASDAQ:COST)
Stocks Reporting Earnings: Best Buy (BBY)
First out of the gate is consumer electronics and appliance retailer Best Buy. The Richfield, Minnesota-headquartered company could use some good news. Year to date, BBY stock is down 26% at $75.68 a share. The share price has been pulled down with the broader market. However, the company was recently named to investment bank Goldman Sachs (NYSE:GS) “margin of safety” list, comprised of stocks that have attractive valuations and balance sheet strength.
For its earnings next week, analysts expect that Best Buy will report earnings per share (EPS) of $1.64 on revenues of $10.44 billion. Anything better than that, and BBY stock could bounce higher. Currently, the stock is trading near its 52-week low of $72, providing an attractive entry point for investors ahead of or immediately following its earnings results. The median price target on Best Buy stock among 21 analysts who cover the company is currently $120, implying 57% upside.
Pet retailer and animal wellness company Petco reports its first quarter numbers on May 24. Wall Street expects the San Diego, California-based company to announce EPS of $0.16 on revenues of $1.46 billion for the January through March period. The company most recently announced a retail partnership aimed at appealing to dog owners who are also outdoor enthusiasts, and particularly like camping.
The partnership is with Backcountry, an online retailer that specializes in camping, hiking, and outdoor equipment. The two companies are creating a collection of outdoor gear for dogs who participate in outdoor experiences with their owners. Called “Backcountry x Petco,” the collection will be sold in Petco’s retail stores as well as on the Petco.com and Backcountry.com websites. WOOF stock is down 14% this year at $17.26 a share.
Stocks Reporting Earnings: Nvidia (NVDA)
Semiconductor and microchip giant Nvidia reports its earnings on May 25 and the results will be carefully scrutinized on Wall Street. NVDA stock has gotten hammered this year along with the shares of all semiconductor companies as concerns rise about supply chain problems and slowing demand. So far in 2022, NVDA stock has fallen 42% to trade at $175.78 a share. Most analysts say that Nvidia stock is a screaming buy at current levels. The median price target on the shares is $332.00, suggesting 89% upside from current levels.
Gaming, artificial intelligence, data centers, self-driving cars and 5G wireless should continue to propel Nvidia’s product sales. The company’s revenue has swelled to $26.9 billion today from $4.3 billion in 2013, making it the world’s leading chip maker. Analysts seem to agree that Nvidia can continue to grow at a strong clip despite current supply chain issues and market volatility. For Q1 this year, Wall Street has forecast that Nvidia will report EPS of $1.29 on revenues of $8.12 billion.
Dick’s Sporting Goods (DKS)
Shares of Dick’s Sporting Goods got pulled down sharply last week along with the entire retail sector. On May 18, DKS stock fell more than 12% after both Walmart and Target whiffed on their Q1 numbers. The company’s share price is now down 30% on the year at $80 a share. At its current level, and with a price-to-earnings (P/E) ratio of only 5, most analysts feel that Dick’s stock is undervalued and ripe for the picking. The median price target on the share price is $137, which would be 70% higher than where the stock currently trades.
Analysts are looking for Dick’s Sporting Goods to report EPS of $2.46 on revenue of $2.61 billion when it announces its quarterly earnings on May 25. Investment bank Morgan Stanley (NYSE:MS) recently named DKS one of the most “unappreciated post-COVID stocks” and urged investors to add it to their portfolios. With the pandemic moving firmly into our collective rearview mirrors and summer fast approaching, Dick’s Sporting Goods is expected to see an uptick in sales.
Stocks Reporting Earnings: Snowflake (SNOW)
Another big tech stock reporting its Q1 print next week is cloud computing data warehousing company Snowflake. The Bozeman, Montana-based company’s stock has been hurt more than most equities during this year’s market selloff. Year to date, SNOW stock is down 54% to $151.31 a share, and is now 63% below its 52-week high of $405 per share. Analysts expect the company to announce EPS of $0.01 on revenue of $41.76 million for this year’s first quarter.
SNOW stock also took a hit in recent weeks from revelations that fellow cloud computing giant Salesforce (NYSE:CRM) has exited its entire position in the company. Salesforce had invested $250 million in Snowflake at the time of the software company’s initial public offering (IPO) in 2020. However, at the end of the first quarter, Salesforce owned no Snowflake shares, according to a regulatory filing, selling all of its shares as the market weakened and fell.
Is the worst over for Chinese technology giant Alibaba? After two years of a punishing government crackdown, analysts and investors are cautiously optimistic that authorities in Beijing might finally be letting up on publicly traded companies, particularly large-cap tech stocks. The Chinese government has pledged support for the country’s technology sector and said it supports plans for new internet companies to go public. Many investors have their fingers crossed that e-commerce giant Alibaba will be able to get its business back on track.
Certainly, BABA stock could use a lift. The Hangzhou-based company’s shares are currently trading at $89, down 61% from a 52-week high of $230.89. Investor confidence in Alibaba’s stock has also been shaken by the prospect that more Chinese companies could be forced to delist from U.S. exchanges, either by authorities in China or the U.S. Securities and Exchange Commission, which is applying more rigor to Chinese companies that trade in New York. Analysts expect Alibaba to report Q1 EPS of $1.09 on revenue of $29.53 billion.
Stocks Reporting Earnings: Costco (COST)
Lastly, we’ll hear from big box grocery retailer Costco next week. The leading retailer’s earnings are almost certain to have an influence on markets when the Seattle-based company reports on May 26. Like Dick’s Sporting Goods, COST stock got yanked lower with the recent selloff in retail securities, plunging nearly 15% over the past week alone to trade at $424 a share. The stock is now down 25% on the year. Analysts anticipate that Costco will report EPS of $3.04 on revenue of $51.38 billion.
The big question for Costco heading into earnings is whether it has succeeded in passing along higher costs to its customers? While some retailers, such as Home Depot (NYSE:HD) have succeeded at this, others, such as Walmart, have not.
Costco has been looking at ways to increase prices at its more than 800 locations around the world, including hiking the price of its famously cheap hot dogs. However, the company decided against that move after encountering a backlash from customers, who appreciate that they’ve been able to buy a hot dog and soda at Costco outlets for $1.50 since the combo was first introduced back in 1985.
Disclosure: On the date of publication, Joel Baglole held long positions in MS and NVDA. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.