Even with the recent earnings season at an end, there are still big names reporting each week. The market has been strong in the first part of the year, but increased concern of a global economic slowdown has spooked investors in recent trading days and led to profit taking across the major indexes.
Overall economic conditions in the U.S. remain solid, but the ongoing trade war between the U.S. and China and rising fear of a global economic slowdown will continue to weigh on investors and put additional pressure on companies to post solid quarterly numbers moving forward.
This week we see reports from some of the country's biggest homebuilders, as well as retailers in the auto and athletic sectors.
Every quarterly report is important so even if you are not currently holding any of the following stocks it is important to be aware of how their reports shape up and the potential impact they can have on the broader market.
Lululemon Athletica Inc. (LULU)
Lululemon Athletica Inc. (LULU) is expected to report its fourth-quarter numbers on Wednesday. The company reports after the market close and analysts forecast earnings of $1.74 per share on sales of $1.15 billion for the quarter. The company has a great earnings track record with better than expected numbers on both the top and bottom line each of the last six quarters. LULU is a high value stock with a forward P/E of 33, but the company is forecast to grow earnings by 25% per annum over the next five years which justifies the high valuation. The street is looking for another earnings beat this quarter with a whisper number of $1.78. LULU scores an overall ranking of 81 on the Stock Score Report and analysts have an average price target of $166.20 on the stock. LULU is currently trading at $145.81.
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Lennar (LEN)
U.S. homebuilder Lennar (LEN) reports its fiscal first-quarter results before the market open on Wednesday. The company is expected to post earnings of 75 cents per share and sales of $4.08 billion for the quarter. The big news with the housing market at this point is the recent announcement from the Federal Reserve that it did not expect to lift interest rates in 2019. After four rate hikes in 2018 the Fed was originally expected to lift rates three times in 2019. That expectation was lowered to two rate hikes earlier in the year and now the indication is no hikes. This is a relief to the housing market as investors worried about the impact of rising rates on the sector. After trending lower through the latter part of 2018 homebuilder stocks have been on the rise and LEN is currently testing a major resistance level at $50 that it will test if the company posts a positive earnings surprise. The street expects a big earnings beat with a whisper number of 82 cents per share for the quarter. LEN gets an overall score of 62 on our Stock Score Report and analysts have an average price target of $55.73 versus the stock's current price of $49.05.
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KB Home (KBH)
Another U.S. homebuilder that will report earnings this week is KB Home (KBH). The company will report its fiscal first-quarter earnings after the market close on Tuesday. Analysts have forecast quarterly earnings of 26 cents per share and revenue of $829.3 million. The street is looking for a positive earnings surprise with a whisper number of 29 cents for the quarter. KB Home has a long history of positive earnings surprises that span the last 12 quarters, but sales were in-line last quarter and lower than expected in the previous quarter. The market will want to see more strength on the top line in this quarter's report. The mood on homebuilders is positive at this point with the Federal Reserve recently announcing it did not expect to boost interest rates in 2019, and a strong report from KBH should fuel optimism and push shares higher. KBH is now trading at $23.82 with an average price target of $24.45. The stock gets an overall score of 55 from our Stock Score Report.
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CarMax (KMX)
Auto retailer CarMax (KMX) reports its fourth-quarter numbers before the market open Friday. The company is forecast to earn $1.04 per share and post sales of $4.44 billion. Like the homebuilder sector, the auto sector is also interest rate sensitive since higher rates lead to higher auto payments. The auto industry is also dealing with lower sales after years of record-setting numbers which has hurt the major auto stocks. Last quarter CarMax posted better than expected earnings but revenues were slightly weaker than expected. The stock initially rose on the mixed results but cooled off and shares have been stuck in a sideways trend for the last two months. The street expects a small earnings beat this quarter with a whisper number of $1.06. If CarMax is able to post positive surprises on both the top and bottom line the stock should rise as investors will weigh the results in addition to news that the Federal Reserve does not plan to lift interest rates for the remainder of the year. KMX trades at $61.96 with an average price target of $82.56 and the stock gets an overall score of 63 on our Stock Score Report.
