Editor’s note: InvestorPlace’s Earnings Reports to Watch is updated weekly. Please check back next week for our latest earnings picks.
U.S. equity markets are climbing again. After weakness in May, broad market indices have rallied in June — for reasons that aren’t obvious. Earnings reports haven’t been much of a driver; the earnings calendar has been light. External factors still seem somewhat bearish.
It may be that fears of a trade war are being balanced by hopes for another Fed rate cut. The May sell-off may have been enough to entice investors. With Treasury yields plunging and overseas risks rising, it may be that investors simply see nowhere else to find returns.
For now, at least, investors seem willing to stick with U.S. equities. With a month to go until earnings season kicks in again, it remains to be seen whether that will remain the case.
In the meantime, there are some interesting earnings reports to watch next week — even if the calendar remains too light to move the entire market. A tech giant will try to prove its turnaround is underway. A cannabis leader will try to jumpstart a sector that has struggled in recent months. And one of the nation’s most important retailers should give clues as to the health of the U.S. consumer.
Investor eyes likely will stay on politics next week, but savvy investors should keep a close eye on these earnings reports as well, even if they may not make headlines.
Earnings Reports to Watch: Oracle (ORCL)
Earnings Report Date: Wednesday, June 19, after market close
Simply put, recent earnings from Oracle (NYSE:ORCL) haven’t been good enough. Oracle actually has beaten expectations in the last two quarters, but revenue declined year-over-year in each period. The company’s long-awaited shift to the cloud hasn’t played out.
Given that, ORCL stock actually has held up reasonably well, touching an all-time high earlier this year. But investor patience might be running out. I asked over a year ago whether Oracle was the next Microsoft (NASDAQ:MSFT) — a tech giant ready to reclaim former glory — or the next IBM (NYSE:IBM), unable to quite keep pace with the technological change around it.
Oracle still hasn’t answered that question, but it gets another chance on Wednesday afternoon. A big fiscal-fourth-quarter report, including some level of revenue growth, might stoke optimism and allow ORCL to reclaim those all-time highs. Anything less at a time when cloud demand should be soaring, and investors might get sick of waiting for Oracle to show progress on its turnaround.
Earnings Report Date: Thursday, June 20, before market open
Grocery stores, including Kroger (NYSE:KR), plunged two years ago when Amazon.com (NASDAQ:AMZN) acquired Whole Foods Market. That deal perhaps hasn’t been as transformative as some thought it might be – but since then, sentiment toward grocery stocks has appeared muted. KR stock did manage to rally from late 2017 lows — but a 10% decline so far this year has the stock back where it traded two years ago.
But what the Amazon-Whole Foods deal obscured was the fact that Kroger itself had sent the industry reeling just the day before. A disastrous fiscal Q1 report sent KR shares tumbling 18% and brought other grocery stocks down with it. As that report showed, Kroger earnings can impact its peers and even its competitors.
For both Kroger and the grocery sector, Q1 FY20 results seem particularly important. Kroger reported more margin pressure with its fiscal Q4 report in March. Walmart (NYSE:WMT), Costco Wholesale (NASDAQ:COST) and even Target (NYSE:TGT) continue to show strength. A second straight miss — particularly if accompanied by more margin pressure — will suggest that Kroger is struggling to compete. That in turn suggests that smaller chains like Weis Markets (NYSE:WMK) and Ingles Markets (NASDAQ:IMKTA) may have their own problems going forward.
With those stocks all selling off of late, expectations for Kroger earnings likely are low. But the company will need to at least meet those expectations — or else investors might start questioning not just KR stock, but the entire sector.
Canopy Growth (CGC)
Earnings Report Date: Thursday, June 20, after market close
After a big rally to start 2019, shares of cannabis play Canopy Growth (NYSE:CGC) have drifted mostly downward. That includes a 20%+ decline from late April highs. Other major pot plays have seen similar trends. With growth slowing in the Canadian recreational market, and no other significant catalyst on the horizon, the optimism surrounding cannabis stocks at least seems to have moderated.
We’ll see if Canopy Growth — the most valuable direct cannabis play out there — can resurrect some of that optimism on Thursday afternoon. Certainly, Canopy earnings are likely to move the entire sector.
And in the context of recent reports, Canopy is carrying a lot of weight. Aurora Cannabis (NYSE:ACB) missed revenue estimates in its fiscal Q3 last month. Cronos (NASDAQ:CRON) earnings were underwhelming.
The sector clearly needs some good news. At the moment, it looks like it’s up to Canopy Growth to provide it.
As of this writing, Vince Martin has no positions in any securities mentioned.
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