The earnings season is all but over, but each week there are still plenty of big names reporting that have the potential to impact the direction of the overall market.
Traders remain cautious with so much uncertainty surrounding the trade war with China and the direction of the interest rates under the Federal Reserve. The Fed has already cut rates once over the summer, and expectations are high that another cut will come before the end of the year to combat a possible economic slowdown both in the U.S. and abroad and the U.S. and China continue to negotiate over trade.
This week there are a couple of big technology companies reporting their quarterly numbers, along with some big retailers. Each of these quarterly reports will be important to watch as they will paint a slightly clearer picture of both corporate and consumer spending.
Let’s take a closer look at each of the companies, and what the street expects to see in their quarterly reports.
Software giant Oracle (ORCL) will report fiscal first-quarter numbers after the market close on Thursday. Ahead of the quarterly report analysts forecast earnings of $0.81 per share, up from $0.71 during the same period last year. The street actually expects an even stronger quarterly report with a whisper number of $0.83. Sales are forecast to rise to $9.29 billion from $9.2 billion a year ago. Oracle has trended lower since early July in sympathy to a volatile broader market due to ongoing trade war. The drop comes despite big top and bottom line beats last quarter, and with the recent drop ORCL now looks very attractive with shares trading at just 13 times future earnings. With profits forecast to rise at an annual rate of 9.4% over the next five years there appears to be a lot of value in the stock. ORCL trades at $54.15 with an average price target of $55.65.
Broadcom (AVGO) is a California based semiconductor company. The chip sector is a heavy exposure to the ongoing trade war between the U.S. and China since any economic slowdowns will surely have an impact on tech spending by both consumers and companies. AVGO has been stuck in a sideways pattern for the majority of 2019 as trade negotiations have stalled and Wall Street has accepted than any potential trade deal will be tough to achieve and will not be a quick process. Broadcom has posted better than expected profits each quarter dating back to first quarter 2011, but revenues have been lighter than expected each of the last two quarters. The company will need to deliver a beat on both the top and bottom line for the stock to break out to the upside given the overall pessimism in the chip sector resulting from the trade war. The market expects another solid earnings beat with a whisper number of $5.30 versus the consensus $5.13, but the top line results will be in focus as traders determine whether or not there is value in the stock at this time. AVGO trades at 12 times future earnings which are forecast to rise at an annual rate of 16% over the next five years. The stock trades at $293.90 with an average price target of $304.82.
Grocery store chain Kroger (KR) will report its second-quarter numbers before the market open on Thursday with analysts expecting earnings of $0.42 per share on revenue of $28.42 billion. Both figures are up from the same period last year when the company reported earning $0.41 per share with sales of $27.9 billion. KR stock was off sharply during the first half of the year after an earnings miss in March and a lackluster in-line report in June but the stock appears to have hit a bottom and is currently making back some of its recent losses. KR is now facing a solid level of resistance around $25.50 that it needs to break through in order to build on its recent gains. A better than expected quarterly report could allow shares to break through resistance and continue to track higher, and the street expects a small earnings beat with a whisper number of $0.43 for the quarter. KR trades at just 11 times earnings, so there is definitely value in the stock and a solid report would push shares steadily higher into the final months of the year. KR trades at $25.10 with an average price target of $27.53.
Video game and console retailer GameStop (GME) reports its second-quarter results after the market close on Tuesday. Analysts expect a loss of 22 cents per share for the quarter, versus last year’s profit of 5 cents. GME stock has trended steadily lower over the last year as more and more gamers are buying games online with no major console upgrades to fuel hardware sales. Last quarter the company produced a big earnings beat while revenues were well below estimates and the stock took a big hit. It has started to recover, but shares remain well below where they were trading ahead of the June report. There is a lot of negativity priced into the stock at this time, and the share price reflects the expected 22 cents loss, so any result better than the consensus could result in a big rally. The street is not optimistic and has a deeper 26 cents loss whisper number for the quarter. Analysts remain cautiously upbeat on the stock with an average price target of $6.75 versus its current $4.85 trading price.