While the earnings season has all but ended, you can still expect reports each week from big name companies. The earnings season was a positive one, but corporate earnings growth is definitely slowing, and that will be a major concern for Wall Street moving forward.
The market is currently in a rally mostly in reaction to a disappointing jobs report last week that sparked optimism that the Federal Reserve will be forced to cut interest rates in the months ahead. We are also seeing a bounce on news that new tariffs will not be put on Mexican imports as President Trump previously threatened if the company did not promise to boost its protection of the U.S/Mexico border.
What we are seeing is very cautious bullish sentiment. Wall Street wants to push stocks higher, but there is enough uncertainty that any negative news will lead to quick drop in the overall market, and any sign of weakness in upcoming earnings report could result in a big drop in individual stocks or sectors.
Here are a few names this week that the market will be watching closely when they report their most recent quarterly numbers.
Lululemon Athletica (LULU)
Athletic apparel company Lululemon Athletica (LULU) will report its first-quarter numbers after the market close on Wednesday. Analysts expect to see the company post earnings of $0.71 per share on revenue of $757.03 million, versus $0.55 on $650 million during the same period last year. After hitting an all-time high in April, LULU shares have moved sideways over the last month as trade-related volatility pulled the major indexes lower. The company is strong growth story with profits up 17.4 per annum over the last five years and forecast to 18.9% annually for the next five years. LULU has posted better than expected numbers on both the top and bottom line each of the last eight quarters and the street expects another positive earnings surprise with a whisper number of $0.77 for the recent quarter. Analysts have an average price target of $182.16 on the stock with shares currently trading at $173.50.
Dave & Buster’s (PLAY)
Dave & Buster’s (PLAY) is expected to release its Q1 report after the market close Tuesday, with the consensus calling for earnings of $1.14 per share and sales of $369.47 million. During the same period last year the company earned $1.04 with sales of $322.2 million. The stock traded lower over the last month in sympathy to weakness in the overall market, but shares had been a strong upward trend prior to the broader market selloff and shares should erase some of the recent losses on a better than expected set of numbers. The street is looking for a small earnings beat for the quarter with a whisper number of $1.18. Earnings have rise 19% annually the last five years, and while growth is expected to slow moving forward, analysts still see earnings growth of 12% per annum for the next five years which should drive the stock higher as shares are currently trading at just 14.4 times future earnings. PLAY is trading at $50.35 and analyst have an average price target of $64.75 on the stock.
Semiconductor giant Broadcom (AVGO) reports its second-quarter numbers Thursday afternoon with the consensus calling for earnings of $5.18 per share and sales of $5.66 billion. During the same period last year Broadcom reported earnings of $4.88 with $5.01 billion in revenue. Analysts have an average price target of $312.73 on the stock, which is currently trading at $280.79. The sector is particularly vulnerable to the ongoing trade war between the U.S. and China, which is a primary reason why AVGO shares have been falling over the last month. The recent pullback in the stock has shares trading at just 10.6 times forward earnings and with earnings forecast to rise 15.6% annually over the next five years the stock should erase some of its recent losses on the back of a strong quarterly report and barring any negative news on trade negotiations between the U.S. and China. The street is expecting a positive earnings surprise with a whisper number of $5.35 for the quarter. AVGO is trading at $280.38 with an average price target of $312.73.
Restoration Hardware (RH)
Restoration Hardware (RH) is scheduled to release its first-quarter numbers after the market close Wednesday. Analysts forecast earnings of $1.54 per share with revenue of $582.9 million. During the same period last year the company earned $1.33 per share on revenue of $557.4 million. RH has been in a strong downward trend over the last three months after posting weaker than expected Q4 sales. The stock is sensitive to the housing market, and with hopes rising that the Federal Reserve will cut interest rates housing and housing-related stocks have started to move higher. The street expects to see a positive earnings surprise with a whisper number of $1.61 for the quarter. The stock is currently trading at just 9.7 times future earnings which creates a lot of upside potential should results top estimates on both the top and bottom line for the recent quarter. RH is currently trading at $92.55 with an average price target of $133.38.