Earnings season is winding down with the majority of companies listed in the S&P 500 index having already reported their financial results. However, their are still a few well-known names left to announce their earnings for the January through March period of this year.
The results come amid extremely tough conditions with nearly all major indices in the U.S. now in bear market territory, defined as a retreat of 20% or more from recent highs. Volatility persists as interest rates continue to rise to dampen inflation, increasing the likelihood of an economic recession in the process.
With sentiment extremely negative, it will likely take exceptional results for these companies to see their stocks rally after their quarterly prints.
Here are four companies reporting earnings the week of June 20.
| LEN | Lennar | $64.30 |
| FDX | Fedex | $225.98 |
| RAD | Rite Aid | $6.10 |
| KMX | CarMax | $85.60 |
Lennar (LEN)
Lennar (NYSE:LEN) is the second biggest home builder in the U.S., and its earnings on June 20 will be carefully parsed for signs of how the national housing market is holding up as mortgage rates rise in tandem with interest rates. Early indications are that housing is starting to slow down from the red hot pace of construction and sales seen during the pandemic.
The National Association of Home Builders/Wells Fargo Housing Market Index fell 2 points to 67 in June, its sixth consecutive monthly decline and the lowest level since June 2020. For context, the index was at 90 points at the end of 2020 as the Covid-19 pandemic spurred strong demand for larger homes in the suburbs and country.
LEN stock is down 45% year to date at $64.30 per share. Wall Street expects Lennar to report earnings per share of $3.98 on revenues of $8.16 billion.
FedEx (FDX)
Shares of shipping and logistics giant FedEx (NYSE:FDX) rose 17% earlier this week on news that the company is raising its quarterly dividend by 53%. FedEx’s quarterly dividend payment will be $1.15 per share going forward, the company said. The dividend increase comes even as the company manages high fuel costs and labor shortages that are impacting its business.
When announcing the dividend increase, FedEx also announced that it is adding “total shareholder return” as a performance metric to its executive compensation program, and appointing two new directors to its board — Amy Lane, a former Merrill Lynch executive, and ex-Union Pacific (NYSE:UNP) chief operating officer (COO) Jim Vena.
The changes at FedEx were prompted by activist investor D.E. Shaw and come just two weeks after Raj Subramaniam assumed the CEO role at FedEx following the retirement of company founder Fred Smith. FDX stock is down 13% this year at $225.98 a share. Analysts expect the company to report EPS of $6.86 on revenues of $24.53 billion.
FedEx reports earnings on June 23.
Rite Aid (RAD)
Camp Hill, Pennsylvania-based drug store chain Rite Aid (NYSE:RAD) has had a tough go of it this year. Down 59% since January, RAD stock is currently trading at $6.10 a share and in danger of falling below the $5 threshold that would put it in penny stock territory.
The issues for the company that operates nearly 2,500 retail drug store locations across the U.S. include an excessive debt load that stands at $3 billion. That debt burden has some analysts worrying aloud about the potential for a bankruptcy filing.
Rite Aid’s turnaround plans include partnering with rural healthcare start-up Homeward to provide primary care services at 700 Rite Aid pharmacy locations in rural U.S. communities. The healthcare services offered will include primary care, as well as specialty care such as cardiology. It remains to be seen if the addition of healthcare services will help. Analysts expect Rite Aid to report an EPS loss of 70 cents on revenues of $5.75 billion on June 23.
CarMax (KMX)
Used car dealer CarMax, which reports earnings on June 24, flourished during the pandemic. With people driving less and new vehicle models in short supply due to production issues and global supply chain constraints at the big automakers, buying used vehicles became very popular with consumers. As a result, KMX stock rose 250% between March 2020 when the pandemic hit and the market’s peak last November. However, this year, the company’s share price has pulled back 33% to currently trade at $85.62 a share.
The Richmond, Virginia-based company that claims to have the largest inventory of used cars across every make and model in the U.S. continues to expand despite the tough economic environment. CarMax has also announced that it is buying back $2 billion worth of its own stock this year, which is positive for shareholders.
The main issue facing the company is the impact that inflation and rising interest rates will have on consumer spending. It could push people more towards used cars that tend to be cheaper than new ones. Or it could lead to a complete halt in consumer spending. Wall Street is looking for CarMax to report EPS of $1.58 on revenues of $9.17 billion.
On the date of publication, Joel Baglole did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
