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Stocks To Watch Before Tuesday’s U.S. Open

Published 10/17/2016, 05:21 PM
Updated 07/09/2023, 06:31 AM
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Earnings Outlook

Goldman Sachs (NYSE:GS): Goldman Sachs has had a rough first half of 2016, but those woes appear to be behind them. Goldman is heading into its earnings report on high note after retail banks trounced their expectations this past Friday. The ongoing recovery in the markets have driven this broader bounce back. Revenue from Investment Banking and Trading activity is expected to grow this quarter after falling by double digits in the second quarter. Meanwhile, the recent surge in the energy sector will help drive revenue. Goldman is one of the largest physical suppliers of energy and commodities, so this will be a significant boost. One major source of concern moving forward will be whether the Federal Reserve imposes new restrictions on the energy sector. The proposed regulation would require banks to hold greater capital reserves when dealing in the energy sector. As these are only in preliminary talks shareholders don’t need to worry about its impact on Tuesday’s report.

Johnson & Johnson (NYSE:JNJ): This year JNJ earnings have been largely better than expected following a rough 2015. In each of the past 4 quarters, revenue has exceeded expectations and steadily improved. The company is taking several steps to improve growth including consolidating its drug portfolio. Analysts are predicting these trends will continue and have forecasted an 11% climb on the bottom line and 4% on the top. While this quarter is likely to exceed expectations, future earnings could face some near-term pressure. The hammer is expected to come down on the pharma industry if Hillary Clinton is elected president. Meanwhile, the industry is becoming increasingly more competitive, infringing on JNJ’s legacy of dominance.

Domino’s Pizza (NYSE:DPZ): The pizza chain’s solid brand position and recent initiatives have successfully driven sales lately. This has lead to steadily improving same-store sales and revenue growth. Last quarter, revenue jumped 12% on a nearly 10% rise in same-store sales. Some of these initiatives that are driving sales include more frequent marketing and promotional campaigns with the use of technology. It’s never been easier to order Domino’s. Consumers can now order via a Tweet or a text, while in the past, it involved a phone call. Domino’s should continue to outpace the rest of the fast food industry as strengthens its position in the pizza industry.

Harley Davidson (NYSE:HOG): The broader recovery in the automotive industry hasn’t translated to many wins for the motorcycle producer. Over the past 4 quarters, both earnings and revenue have steadily declined and analysts are now forecasting negative growth for the upcoming quarter. Weak U.S. trends have been largely to blame for this ongoing trend down. Harley currently generates over 70% of its revenue from the U.S. markets that have struggled. Last quarter, the company posted a 2% decline in overall sales and a 5.3% drop in domestic markets. Recent efforts to expand globally have helped bolster its market share to a resounding 50%. Regardless of its huge position, earnings are still likely to flounder Tuesday morning.

Blackrock (NYSE:BLK): Blackrock has been one of the most beaten-down banks in the first half of 2016. Both earnings and revenues have fallen short of expectations by a wide margin. This hasn’t had much of an impact on the stock, which is up 10% year to date. With the financial sector appearing to trend up, Blackrock could be in store for a bounce-back report. Additionally, the surge in the market since Brexit should be a huge boost to the top line.

How do you think these names will report?

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