Stocks rose last week as earnings season shifted into high gear and new data showed strong growth in the U.S. economy. Both the S&P 500 (SNPINDEX: ^GSPC) and the Dow Jones Industrial Average (DJINDICES: ^DJI) gained ground to stay in modestly positive territory so far in 2018.
S&P 500 and Dow Jones Industrial Average Year-to-Date Performance, data by YCharts.
The week ahead includes some potentially market-moving earnings announcements from Apple (NASDAQ: AAPL), Procter & Gamble (NYSE: PG), and Wayfair (NYSE: W). Read on for a preview of these highly-anticipated reports.
Apple’s iPhone growth
Investors are expecting good news out of Apple when it posts fiscal third-quarter results on Tuesday afternoon. The company booked growth across its iPhone, services, and wearables divisions last quarter, and CEO Tim Cook and his executive team predicted back in May that sales would rise to between $51.5 billion and $53.5 billion in Q3. That might not be enough to push Apple’s business valuation over the $1 trillion mark in the near term, but it would equate to impressive year-over-year growth of between 13% and 18% for the leading consumer tech giant.
Image source: Getty Images.
Beyond detailing improvements in its core businesses, look for Apple to talk about its aggressive capital return plan, which currently calls for $100 billion of stock repurchase spending alongside a robust dividend. The company’s growth outlook will be closely parsed by investors, too. Wall Street currently expects Apple to expand sales by about 13% to just under $60 billion in the fiscal fourth quarter.
Procter & Gamble’s outlook
Consumer products giant Procter & Gamble announces its results on Tuesday morning amid rising shareholder pessimism. Sales gains for the maker of powerhouse global franchises like Tide detergent and Pampers diapers slowed to a crawl last quarter, after all. The news contributed to further underperformance in the stock this year.
Growth trends aren’t likely to improve by much this week. Rival Kimberly-Clark recently announced flat sales, while noting that raw material costs are rising even as pricing trends worsen.
P&G might point to the same challenges as reason for holding — or perhaps downgrading — its guidance, which currently calls for sales growth of just 2% this fiscal year. Investors can look for this modest growth to be supplemented by aggressive cost cuts and direct cash returns through dividends and share repurchases.
Wayfair’s market share
There’s a war being waged in the home furnishings industry, and e-commerce specialist Wayfair has been winning that skirmish lately. Its sales spiked 48% higher in the first quarter, despite elevated efforts by rivals to halt its market-share momentum.
Image source: Getty Images.
Investors will get an update on that competitive struggle when Wayfair posts results on Thursday morning. In addition to watching the revenue pace, keep an eye on marketing spending, since a surprising bump there might suggest that price cuts by competitors have finally slowed Wayfair’s user growth.
Executives should also update shareholders on Wayfair’s progress at building out its shipping infrastructure both in the U.S. and in international markets. Neither of these business segments is profitable yet, but investors are hoping that this is just a temporary situation that will improve dramatically once Wayfair shifts its focus from building scale to maximizing profits.
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Demitrios Kalogeropoulos owns shares of Apple. The Motley Fool owns shares of and recommends Apple and Wayfair. The Motley Fool is long January 2020 $150 calls on Apple and short January 2020 $155 calls on Apple. The Motley Fool has a disclosure policy.
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