There's never a dull moment on Wall Street, and next week will be no exception as some big-name companies spell out the state of their businesses in their quarterly reports. Here are some items (official quarterly reporting and otherwise) that will shape the week ahead.
1. Orange aprons on parade
There's little reason to get excited about home improvement these days. Hardwood discounter Lumber Liquidators (LL) and patio decking specialist Trex (TREX) saw their stocks get pounded last month when they hosed down their near-term outlooks.
Investors will get a clearer picture of the carnage when Lowe's (LOW) and Home Depot (HD) report on Monday and Tuesday, respectively. However, the market has already made up its mind. Both of the do-it-yourself superstore chains are trading near their 52-week lows. Analysts, on the other hand, see things differently and expect both retailers to post earnings growth of a little over 15% next week.
2. Computing's elders hold court
We're living in a time when "good enough" computing is leaving a dent in the traditional computing industry. Folks no longer need to fire up the PC or laptop when a smartphone or tablet will do the trick. It's in this climate that Dell (DELL) and Hewlett-Packard (HPQ) will check in with their quarterly results.
The two PC giants have responded in different ways:
- Dell has been slow to move into handheld gadgetry, preferring simply to slash its once-bulky cost structure.
- HP bought Palm and has been trying to play a bigger role on the business services side, where margins are more robust.
Both paths appear to be working as far as profitability goes, as analysts see Dell and HP posting higher earnings during the quarter.
3. Shake the mothballs off those bell bottoms
On Monday, Sirius XM Radio (SIRI) debuts a new commercial-free channel devoted to the glory days of disco.
The satellite radio provider is teaming up with some of the legends behind the iconic Studio 54 dance club to crank out groovy programming. Studio 54 Radio will feature retro club DJ mixes along with interviews and other club-related content.
Obviously the new channel won't be for everyone, but that's pretty much the point with Sirius XM. With dozens of channels at its disposal, Sirius XM can do the deep genre dives to win over a niche market at the national level. Can your local FM station do that?
4. Searching for thrifty shoppers
Wal-Mart (WMT) has a problem. Its signature greeters aren't welcoming as many shoppers as they used to. Same-store sales have surprisingly fallen for eight quarters in a row, and there's little reason to believe the streak won't be stretched to nine consecutive quarters of negative comps when Wal-Mart reports on Tuesday.
What is happening at Wal-Mart? A simple explanation would be that the economy turned against the world's largest retailer. Wal-Mart held up well during the early stages of the last recession, as thrifty consumers traded down to the discounter for their essentials. A popular argument is that many of those shoppers have been trading back up over the past two years.
There are probably other trends working against Wal-Mart. Online shopping has taken a bite out of most bricks-and-mortar chains, even those like Wal-Mart with strong e-commerce initiatives. Wal-Mart is also a victim of the digitization of media. All of that space devoted to CDs, books, movies, and video games has to be hurting now that folks are downloading media directly.
Either way, Wal-Mart won't be the only way to take the pulse of the penny pinchers. Target (TGT), Dollar Tree (DLTR), Ross Stores (ROST), and TJ Maxx parent TJX (TJX) will all be reporting their latest quarterly results next week.
5. Seeing if the Easy Button's on the fritz
Investors should care about Wednesday's earnings report out of Staples (SPLS). The darling in office supply retail is a great proxy for the state of small businesses out there. If folks are buying new ink toner cartridges and task chairs, it's a good sign that business owners are optimistic. As long as we're not talking about a run on red-ink pens, a strong Staples is a fair indicator of an improving economy.
Unfortunately, Staples hasn't been a very good performer lately. Analysts see Staples earning as much as it did during last year's fiscal second quarter, but the superstore chain has also came up short against Wall Street's profit projections in its two previous quarters.
It's going to be a showdown over calculator roll refills and mouse pads that you won't want to miss.
Longtime Motley Fool contributor Rick Munarriz does not owns shares in any of the stocks in this article. The Motley Fool owns shares of Wal-Mart and Lumber Liquidators. Motley Fool newsletter services have recommended buying shares of Home Depot, Lowe's Companies, Wal-Mart, Staples, and Lumber Liquidators.