Shrugging off a disappointing end to US-China trade talks, the threat of additional interest rate hikes, and the most recent political uncertainty surrounding President Trump’s administration, investors sent the S&P 500 to a new record high to finish the week, ending a six-month drought during which equities tumbled into a correction.
Robust second-quarter earnings and the continued strength of the US economy have been the primary catalysts for the continuation of this decade-old bull run, which is the longest in history by some measures. While the Q2 earnings season is almost over, there are still a few high-profile earnings reports from key sectors of the economy in the week ahead which could keep this market momentum going and help shape investor views about the future.
Below are two stocks that could move on their earnings reports this coming week and a third stock that continues to garner investor and analyst interest for a variety of reasons:
1. Best Buy
Q2 Report Date: Tuesday, August 28 before market open | Consensus expectations - EPS:$0.83; Revenue: $9.25B
Best Buy (NYSE:BBY) is the last remaining household retail name which has yet to report Q2 earnings. Judging by the strong performance of other retailers, as well as Best Buy’s key suppliers, during this earnings season, chances are good that this Minnesota-based purveyor of electronic products is going to surpass analyst expectations on both sales and net income.
Indeed, earlier this month, Walmart (NYSE:WMT) reported that its second-quarter "electronics comp sales were the strongest in 4 years”, while the personal computer supplier Lenovo Group (OTC:LNVGY) reported a 19% jump in its first-quarter revenue, both beating estimates by wide margins.
Wall Street consensus for Tuesday's release is for $0.82 a share earnings on revenue of $9.27 billion. These estimates represent year-over-year growth of 19% and 37%, respectively. Buoyed by these bullish expectations, Best Buy shares have gained 8% since August 15, adding to the 33% jump in its stock price during the past one year.
But history tells us that an earnings beat on its own probably won’t be enough to satisfy Best Buy bulls. Shares of this retailer plunged more than 8% after the company's Q1 earnings call in May, when the company said it was holding its full-year guidance steady.
2. Salesforce.com
Earnings Report Date: Wednesday, August 29 after market close | Consensus expectations - EPS $0.47; Revenue: $3.23B
Salesforce.com (NYSE:CRM), which sells software and cloud-based services to corporate clients, is among those high-flying technology stocks that have been benefiting from a global surge in IT spending. There are no signs that this trend will be changing anytime soon. The San Francisco-based company has consistently beaten analyst estimates on earnings and sales and investors have high hopes for the company's Q2 report as well.
In its most recent guidance, the company said it expected sales to increase to $3.23 billion, up from analyst projections of $3.1 billion, as the company sees benefits from its largest-ever acquisition, of MuleSoft a provider of platforms for building application networks. The deal, completed in May, is helping Salesforce become a serious competitor in cloud-based computing.
Heading into its Q2 earnings report, Salesforce shares have had an impressive run—rising 49% this year and moving closer to analysts' 12-month consensus price estimate of $156 a share. Another earnings beat and bullish forecast will likely fuel additional gains.
3. Tesla
Beyond just earnings, Tesla (NASDAQ:TSLA) has kept investors guessing throughout the year—about the future of its stock and the company itself. This coming week could turn out to be more of the same.
In a blog post published late Friday, chairman, CEO, founder and largest shareholder Elon Musk announced that he is jettisoning his plan to take Tesla private after more than two weeks of tweeting that he had funding in place to remove his electric car manufacturing company from public markets.
“I believe the better path is for Tesla to remain public. The Board indicated that they agree,” Musk said in Friday's post. Tesla stock has plunged 17% since August 8 amid speculation about how the company would raise money to take Tesla private.
Now that this particular point of speculation has been retired, investors will likely once again shift their focus back to issues surrounding the company’s liquidity and Model 3 production targets. Get set for another bumpy ride this week.