With the majority of mega-cap earnings results already released, this coming week's reports will be all about retailers and their forecasts for consumer demand during the busy summer period and going forward.
As such, we'll hear from some of the largest US retailers amid some signs of a slowdown in sales after brisk activity over the past year. Investors will be watching for updates on the ongoing shortage of workers and any fallout from rising inflation—and the impact of all of this on retail sales and prices.
Last week's University of Michigan Consumer Sentiment Index print showed the weakest reading since December 2011, reflecting the impact of higher prices and the surging cases of the Delta variant in the US.
Below, we've short-listed three stocks which could see some trading action after they report their quarterly numbers during the week ahead:
1. Walmart
America’s biggest retailer, Walmart (NYSE:WMT) reports its fiscal 2022, second-quarter earnings on Tuesday, Aug. 16, before the market opens. Consensus anticipates EPS of $1.56 on revenue of $136.63 billion.
Walmart has been a net beneficiary during the pandemic as customers, staying home, stockpiled grocery items and consumed more daily staples. The Bentonville, Arkansas-based retailer, however, has warned investors this year that it expects a slowdown in sales and profit for the year as consumers take a break from their pantry-loading habits, developed during the pandemic.
According to the retail giant, earnings per share will decline slightly in the current fiscal year, with US comparable sales nonetheless staying in positive territory. Even as the pandemic's impact gradually tapers off, the performance of Walmart's stock has not been impressive this year, rising just about 4%. Shares closed on Friday at $149.53.
2. Home Depot
Home improvement giant Home Depot (NYSE:HD) will also report its Q2 2021 earnings on Tuesday before the market opens. Analysts expect $4.42 a share in profit on sales of $40.48 billion.
HD was another pandemic retail beneficiary as consumers, stuck in their homes, spent more money on home renovations and setting up in-home offices. That trend may have continued during Q2 as rising home prices and low interest rates encouraged homeowners to spend more on remodeling rather than moving.
In May, the Atlanta-based retailer said demand for its products remained strong, helped by government stimulus checks. Without the benefit of additional stimulus payments and as consumers start to spend more on activities outside of the home, the company may see some slowdown going forward.
HD stock, which closed on Friday at $331.32, has gained 26% this year, outperforming the benchmark S&P 500.
3. NVIDIA Corporation
Semiconductor giant, NVIDIA Corporation (NASDAQ:NVDA) will report its Q2 earnings on Wednesday, Aug. 18 after the market close. Analysts expect the chipmaker to produce an EPS of $1.02 on revenues of $6.32 billion.
During the past three months, shares of NVIDIA have gained momentum, as the demand for chips remained strong. The stock, which went through a 4:1 split in July, closed at $201.88 on Friday, after surging 55% this year.
The Santa Clara, California-based chip manufacturer is the biggest producer of graphics chips used in personal computer gaming. Over the past few years, NVDA has successfully adapted its technology for the Artificial Intelligence market, creating an additional, new, multi-billion-dollar line of business.
In May, NVIDIA provided a bullish forecast on demand for chips used in gaming PCs, data centers and cryptocurrency mining. Revenue in the current quarter will be about $6.3 billion, plus or minus 2%. A $400 million chunk of second-quarter revenue will come from special chips the company has created for use by cryptocurrency miners.