"Upcoming Earnings Reports: Companies to Watch for Downside Earnings Momentum"

Anticipating a Challenging Week for Some Companies Reporting Earnings

Overview of Upcoming Earnings Reports

The forthcoming week could prove challenging for several companies, particularly retailers, who are scheduled to release their latest quarterly results. Among these companies are retail giants Walmart and Target. These reports will offer investors valuable insights into the health of the U.S. consumer market, particularly as the economy strives to stave off a recession. So far, the current earnings season has surpassed expectations. According to FactSet data, approximately 80% of the S&P 500 companies, which equates to 91% of the total, have exceeded Wall Street's estimates.

Mixed Bag of Reports

The past week has seen a mixed bag of reports, with Disney surpassing forecasts and Roblox falling short. As we head into the new week, analysts have grown more pessimistic about certain companies and have reduced their estimates ahead of these companies' reports. CNBC Pro used FactSet data to identify companies scheduled to report their quarterly results in the coming week that meet specific criteria, including being a member of the S&P 500 and having analyst estimates that have been revised downward by at least 0.5% over the past three months.

Estée Lauder and Target: A Closer Look

Estée Lauder has seen the largest analyst markdown on the list, with average earnings per share estimates plummeting over 182% over the past three months. The consensus among analysts predicts a loss of 4 cents per share. Estée Lauder's stock has declined more than 32% this year, and analysts have also lowered their three-month average price targets by 11.2%. The cosmetics giant is set to report earnings on August 18. Retail titan Target has experienced a three-month earnings estimate markdown from analysts of 23.3%. Analysts have also reduced their price targets by an average of 8.7% over the past three months. FactSet analysts now predict adjusted earnings per share of $1.51 for the previous quarter. Target's stock has retreated more than 12% this year.

Home Depot and Walmart: What to Expect

Home improvement behemoth Home Depot and Walmart have also made the list, with average three-month adjusted earnings per share reductions of 6.3% and 0.8%, respectively. Both companies have reported a more cautious consumer due to persistent inflation in past earnings reports. Home Depot's stock has increased nearly 5% since the start of the year. The company is scheduled to report second-quarter results on Tuesday, while Walmart's report is due on Thursday. FactSet analysts forecast adjusted earnings per share of $4.46 for Home Depot and $1.69 for Walmart.

Conclusion: Implications for New Businesses

The anticipated challenging week for some companies reporting earnings provides valuable lessons for new businesses. It underscores the importance of financial transparency, strategic planning, and the ability to navigate economic fluctuations. The upcoming earnings reports, particularly from retailers such as Walmart and Target, highlight the impact of economic trends on business performance. For new businesses, this serves as a reminder to keep a close eye on market trends and economic indicators, and to be prepared for potential economic downturns. The mixed bag of reports, with some companies surpassing forecasts and others falling short, illustrates the unpredictability of business operations. This emphasizes the need for new businesses to have robust financial management and risk mitigation strategies in place. The markdown of earnings estimates for companies like Estée Lauder and Target underscores the importance of managing expectations and maintaining investor confidence. It's crucial for new businesses to communicate effectively with investors and stakeholders, particularly during challenging times. The cautious consumer sentiment reported by Home Depot and Walmart due to persistent inflation underscores the importance of understanding and responding to consumer behavior. This is a critical lesson for new businesses in developing their marketing and pricing strategies. In conclusion, while the upcoming week may be challenging for some companies, it offers valuable insights and lessons for new businesses in navigating the complex business landscape. Article First Published at: https://www.cnbc.com/2023/08/11/stock-market-outlook-beware-second-quarter-eps-results-inflation-consumer.html Brought to you by ChatGPT for www.BusinessFormation.io