Earnings season is an important time for the stock market. Investors get to see numbers that show the health of specific companies, sectors and the market as a whole. So far, even though there have been only a handful of reports, the initial first-quarter numbers are pretty robust.
So which big-name stocks have the most at stake in the next two weeks as they look to report earnings?
Under Armour: Reports before the bell April 27
To say shares of Under Armour reacted unfavorably to the company’s previous earnings report is perhaps the understatement of the year. The athletic apparel company was brutalized by a roughly 30% decline in just a few trading days after posting an unexpected dip in profits, coupled with a disappointing 2017 outlook. Unfortunately, this is what happens to momentum stocks when Wall Street gets a feeling that momentum is waning.
Under Armour does have some bright spots, chiefly in its fast-growing footwear business and continued inroads in direct-to-consumer sales that forgo third-party merchants to bolster margins. This crucial first-quarter earnings report will either highlight those existing areas of opportunity or reinforce the negativity seen in January. Unfortunately, the tale of the tape doesn’t look good; UA shares plummeted from more than $25 before fourth-quarter 2016 numbers hit to as low as $17, and aside from a dead-cat bounce in February, shares have struggled around the $18 mark ever since. Under Armour really needs a glimmer of hope in this upcoming quarterly report, or it could be a very rough year for its shareholders.
Apple: Reports after the bell May 2
In contrast to Under Armour, tech giant Apple saw its stock move dramatically higher after its last report. Thanks to strong fiscal first-quarter numbers that dropped at the end of January, shares of Apple are now up about 23% year-to-date vs. about 5% gains for the broader S&P 500 in the same period. The cause for optimism was a record quarter for the all-important holiday season, and an important snap-back in iPhone sales after the flagship smartphone finally reached critical mass in 2016 and suffered its first revenue declines in a decade as a result.
What’s next for Apple? As MarketWatch tech columnist Therese Poletti rightfully pointed out last quarter, other product categories still aren’t as important to investors just yet. So it will be crucial to see whether iPhone sales remain resilient, whether other revenue streams from the iTunes store or the iPad can keep up strong holiday performance trends and whether Wall Street is still optimistic about an all-important iPhone 8 launch in a few months.
Nvidia: Reports after the bell May 9
Gravity-defying tech stock Nvidia is up a stunning 175% or so in the past 12 months. That performance has been powered by several impressive earnings reports in 2016. But since February, the bloom has been off the rose. In fact, despite another arguably strong earnings report for fourth-quarter 2016 — including record profit and 55% sales growth — shares actually declined and have been drifting slowly lower ever since.
That means investors who haven’t already exited their trade in this momentum-stock darling have a lot riding on the next quarterly report. Will high expectations again offset any growth and cause continued decline? Or will Nvidia wow Wall Street once more and enjoy another of its big moves higher? We’ll find out in May.
Facebook: Reports after the bell May 3
Speaking of gravity-defying tech stocks, Facebook Inc. doesn’t seem to know the definition of the word “down.” Its stock has moved in a nearly constant march higher since mid-2013, and its user base continues to grow; almost 2 billion people log on to the social media platform each month. Plus, the company hasn’t missed Wall Street expectations since its early days as a public company. It all makes one wonder how long CEO Mark Zuckerberg & Co. can keep this up — particularly given some recent bad press around Facebook’s problems with fake news and overstated video ad views. No large-cap stock has been as consistent an outperformer in the past few years as Facebook has, and it will be important for the company to keep up that track record of success in early May if it wants to prevent a breakdown in 2017.
Jr Trader Alexander Kumanov
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