With most of the biggest earning reports of the season already released, investors are turning their attention back to macro issues. And there are few things more important for the market's direction than the progress of ongoing trade negotiations between the U.S. and China.
We were reminded of that on Friday when the Wall Street Journal reported that the two countries haven't yet drafted their deal proposals. That sent the Dow Jones Industrial Average tumbling 285 points at one point during the day; it closed down 63.2 points to finish the trading week.
That news came just one day after President Donald Trump confirmed that he will not meet with Chinese President Xi Jinping before the March 2 deal deadline. We think that issue will continue to pressure equities this coming week and in the weeks beyond.
On the earnings front, there are still some important releases to watch. Some of the companies still to report include industry leaders such Coca-Cola and chipmaker Nvidia. Their results may have implications for the entire market. Here are three names we're focusing on that are scheduled to report this coming week.
The world’s largest soft-drink maker, Coca-Cola Co. (NYSE:KO), is scheduled to announce its fourth-quarter earnings on Thursday, Feb. 14, before the market opens. On average, analysts are expecting $0.43 a share profit, up from $0.39 a share a year ago. Sales are forecast to fall 6.4% to $7.03 billion for the same period.
In the third-quarter, the soft drink giant benefited from a rebound in demand for diet cola as consumers turned back to the zero-calorie drinks they once spurned. The company’s global soda volume grew 2% from the same quarter a year ago, led by rising sales of Diet Coke and Coke Zero Sugar.
Coke's bigger picture is different though: the company is striving to become a “total beverage company.” It's diversifying its product portfolio as consumers increasingly turn away from sugary drinks.
In that regard, the past one year has been a good one for the Atlanta-based beverage manufacturer. It made a $5-billion deal to buy U.K.-based Costa Coffee, giving it entry to the most robust segment of the non-alcoholic beverage marketplace.
Coca-Cola's shares, which closed on Friday at $49.50, are up almost 20% over the past 12 months. As such, investors will be eager to find out if the company is succeeding in its efforts to arrest the slowing soda business while growing sales from its non-surgery offerings.
Leading chipmaker Nvidia (NASDAQ:NVDA) may be in for yet more bad news when it reports fourth-quarter 2019 earnings on Thursday, Feb. 14, after the market close. In its pre-earnings update to investors late last month, the company already set a low bar for expectations.
On Jan. 28, Nvidia shares plunged the most in two months after it cut its outlook for Q4 revenue, citing weaker sales of "gaming and data center platforms."
The industry's biggest maker of chips for computer graphics cards blamed a slowing global economy, especially in China for its lagging growth, saying it sees fiscal fourth quarter revenue of about $2.2 billion, down from a previous forecast of about $2.7 billion.
With an almost 50% plunge in Nvidia’s shares since their all-time high in October—the stock is currently trading at $148.17—we don’t expect a big slide in the stock no matter what the report reveals since most of the bad news is already priced in. One interesting detail to look for in Nvidia’s earnings announcement will be the company’s forecast for 2019 and whether it sees a bottom at hand for the current downturn.
Cisco Systems Inc. (NASDAQ:CSCO) plans to announce its fiscal Q2 2019 earnings on Wednesday, Feb. 13 after the market close. Analysts on average are forecasting $0.72 a share profit, up from $0.63 a year ago. Sales are likely to expand 4.4% to $12.4 billion.
The report from the largest maker of networking gear should provide investors with good insight into the current tech spending patterns Cisco's customers, primarily big corporate entities.
During its September quarterly earnings report, the company projected sales in the fiscal second quarter to increase 5-7%, while adjusted profit was expected to be between $0.71-$0.73 a share in the period ending in January.
Cisco's stock closed on Friday at $47.10. It's strong share rebound since the December lows, up 17% since the Christmas eve plunge, indicates the Street is upbeat about the company which has been updating its main hardware products.
As well,Cisco has been actively acquiring companies such as software solutions provider Ensoft, and Duo Security, in order grow its software and services businesses. Two additional acquisitions are still in process, semiconductor company Luxtera and the recently announced Singularity Networks acquisition.
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