The earnings season rolls on, and this week there are several big name companies set to report their quarterly numbers to Wall Street.
So far it has been an upbeat earnings season, and the market has reacted favorably despite a lot of uncertainty surrounding interest rates, slowing corporate earnings growth, an ongoing trade war, and the threat of another government shutdown.
The market remains cautiously optimistic, but the level of uncertainty puts a lot of pressure on this quarter's earnings reports. We have seen stocks stage big rallies on positive reports, and we have also seen big drops following weak reports.
With the market as jittery and volatile as it has been, each report carries a lot of weight. Here are five companies that will report this week and set the tone of the rest of the market.
Coca-Cola (KO)
Soft drink giant Coca-Cola (KO) will look to hit a new all-time high following its fiscal first-quarter report on May 9. The company will report its numbers before the market open Thursday with the consensus calling for earnings of 43 cents per share on revenue of $7.05 billion, versus earnings of 39 cents and revenue of $7.5 billion during the same period next years. Coca-Cola has faced a health shift in the U.S. away from sugary soft drinks, but the company's strong snack and non-carbonated drink lines have helped ease the lower soft drink sales.
Wall Street remains bullish on the stock which is currently just shy of its all-time high and analysts expect earnings to grow 6.6% per annum over the next five years. If Coca-Cola can consistently hits its estimates and show earnings growth the stock will continue to climb. The street is looking for a small beat this quarter with a whisper number of 44 cents, and analysts have an average price target of $51.00 on the stock.
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NVIDIA Corp. (NVDA)
Chip maker NVIDIA (NVDA) is hovering just above its 52-week low after a disastrous fourth quarter in 2018. Trade tensions between the U.S. and China spooked the market over a possible slowdown in demand for chips in the near future. All of the chip makers have shown weakness in recent months, and Wall Street wants to see just how much of an impact the current slowdown in China and ongoing trade war is having on the sector. Micron Tech. (MU) is expected to post fourth-quarter earnings after the market close Thursday of 74 cents per share on revenue of $2.37 billion. During the same period last year the company earned $1.72 and reported sales of $2.91 billion. The numbers are down, but that is somewhat to be expected after years of blistering growth and tough comparables.
The company has grown profits by 66% per annum over the last five years. That number is slowing significantly, but analysts still see a very respectable annual growth rate of 13% for the next five years. The lower year over year profits this quarter have already been priced into the stock so it should not drive the stock lower, and with so much negativity already in the stock any signs of strength could result in a nice gap higher. The street is looking for a good quarter and expects an earnings beat with a whisper number of 79 cents for the quarter. Analysts have an average price target of $204.95 on the stock.
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Cisco Systems (CSCO)
Cisco Systems (CSCO) reports its fiscal second-quarter numbers this week. The company reports after the market close Wednesday with the consensus calling for earnings of 72 cents per share and revenue of $12.4 billion. Both figures are up from the same period last year when the company earned 63 cents and had revenue of $11.9 billion. The stock took a big hit in December when the market correction really hit the tech sector, but investors quickly rushed back in and the stock has traded up near its 52-week high ahead of the upcoming report.
The company has shown respectable earnings growth of 6.5% per annum over the last five years and analysts see that number growing to 9% over the next five years. CSCO is trading at just 14 times future earnings so there is plenty of upside if the company is able to hit its targets. The street expects to see a positive earnings surprise this quarter with a whisper number of 74 cents which would mark the company's sixth-straight earnings beat. CSCO trades at $47.47 with an average price target of $52.29.
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Yelp (YELP)
Yelp (YELP) will report fourth-quarter numbers after the market close Wednesday. The social business review company has been volatile over the last year, and the stock took a big hit following last quarter's report which topped estimates on the bottom line while falling short on revenue. After plunging over 26% following the mixed report YELP has managed to trend higher over the last three months but remains well below where it was trading before the last set of quarterly numbers were released.
The consensus for this week's report calls for earnings of 13 cents per share on revenue of $241.05 million. During the same period last year the company reported earnings of 10 cents per share and sales of 218 million. Last quarter's report illustrated how cautious Wall Street is of the company and how quickly the stock can fall on any sign of weakness. The good news is that the volatility can work in the company's favor and given the amount of negativity already priced into the stock shares could stage a huge post-earnings rally on strong results. YELP currently trades at $38.18 with an average price target of $38.06.
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Activision (ATVI)
Video game maker Activision (ATVI) will report its fourth-quarter numbers after the market close on Tuesday. Analysts forecast earnings of $1.29 for the quarter and revenue of $3.05 billion. During the same period last year the company earned 94 cents and had sales of $2.64 billion. The global explosion in popularity of Fortnite is a problem for the entire gaming sector, and was evident in Electronic Arts' (EA) earnings miss earlier this month. EA sold of sharply following its miss, but shares quickly rallied and are currently higher than where they were before the report. Activision fell in sympathy but has yet to recover as traders await the company's results and clues as the level of impact Fortnite is having on the company's operations.
Activision has posted strong earnings growth of 29% per annum over the last five years, and analysts expect earnings to continue to grow at an average annual rate of 9% over the next five years. The company has posted positive earnings surprises the last four quarters and Wall Street expects another earnings beat this week with a whisper number of $1.34 for the quarter. With the recent weakness, ATVI trades at just 15 time future earnings, so there is a lot of value in the company should the quarterly numbers impress, and given the sharp rise in EA following its sell off, Wall Street could be quick to rush back into ATVI on the back of a strong set of numbers. ATVI trades at $40.68 with an average price target of $65.95.
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