3 Things to Watch in the Stock Market This Week




  • In Business/Economy
  • 2018-10-21 13:35:00Z
  • By Demitrios Kalogeropoulos, The Motley Fool
 

Stocks inched higher last week to rebound slightly from the prior week's sharp drop. That left both the S&P 500 (SNPINDEX: ^GSPC) and the Dow Jones Industrial Average (DJINDICES: ^DJI) below record highs, but still up more than 3% so far this year.

^SPX data by YCharts.

Hundreds of companies are set to post third-quarter earnings reports over the next week. Below, we'll take a closer look at the announcements that could send shares of McDonald's (NYSE: MCD), iRobot (NASDAQ: IRBT), and Amazon (NASDAQ: AMZN) moving in the trading days ahead.

McDonald's customer traffic

McDonald's announces its results before the opening bell on Tuesday in a report that should tell investors a lot about the health of the global fast food industry. The chain has continued its impressive growth rebound, but that recovery has been looking less robust over the last six months. Sales gains slowed to 4% last quarter, in fact, as McDonald's struggled with softening demand in the U.S. market.

That stumble means investors will be interested in the chain's customer traffic numbers in the domestic market, which slipped into negative territory in each of the last two quarters. CEO Steve Easterbrook and his team plan to push that metric higher, mainly through initiatives like store remodels, menu upgrades, and digital ordering offerings. These moves have helped speed growth in many of Mickey D's international markets, including France and Japan, so the company is confident the changes will eventually translate well to its most mature segment.

iRobot's profit margin

Thanks in part to a banner outing during Amazon's Prime Day sale, investors are already optimistic that iRobot will post solid third-quarter sales results on Tuesday afternoon. The robotic cleaning device specialist said in late July that it sold out of its Roomba products during the Amazon event despite doubling the quantity of available devices. That boost is a key reason investors are looking for sales gains of about 19% for the quarter.

Image source: Getty Images.

iRobot's profitability will be in the spotlight since the strength of its gross and operating profit margins should reflect whether the company is feeling more pressure from the flood of new competition entering the market lately.

Yet investors will be even more focused on the company's updated outlook heading into the core holiday shopping season. On the bright side, iRobot has a fresh lineup of devices it can market toward consumers who are increasingly open to the idea of having robotic cleaning products in their homes. That optimism might be tempered somewhat by rising manufacturing costs due to tariffs hitting many of the company's key inputs.

Amazon's outlook

A batch of strong earnings reports so far this year have helped Amazon's stock soar despite a roughly flat outing for the broader market. That means the e-commerce titan has a high bar to clear when it announces its results on Thursday afternoon.

Its last report was highlighted by a 39% sales spike that by itself might have been enough to spark a rally in the stock. Investors were even more pleased to hear about Amazon's 1,168% profit increase, though, as earnings more than doubled Wall Street estimates to land at $5.07 per share.

This time around, Amazon has predicted revenue of between $54 billion and $57.5 billion, which would mark growth between 23% and 31%. Investors are hoping to see more evidence of pricing power at its AWS cloud services segment. They're also expecting an optimistic outlook from CEO Jeff Bezos and his team as they look out to what's likely to be another record holiday season.

John Mackey, CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool's board of directors. Demitrios Kalogeropoulos owns shares of Amazon and McDonald's. The Motley Fool owns shares of and recommends Amazon and iRobot. The Motley Fool has a disclosure policy.

COMMENTS

More Related News

Amazon HR exec: This interview misstep can kill your chances of getting hired
Amazon HR exec: This interview misstep can kill your chances of getting hired

What you do before an interview is just as important as what you do during an interview.

A.J. Gallagher
A.J. Gallagher's 'clean coal' business draws ire of green investors

Two of America's best-known green investors are reassessing their stakes in global insurance broker Arthur J. Gallagher & Co's after a Reuters investigation into the company's lucrative side-business in "clean coal". A.J. Gallagher has invested in 34 facilities producing so-called refined coal, which is chemically treated to make it burn cleaner and heavily subsidized by the U.S. government. A.J. Gallagher has accumulated about $850 million worth of U.S. government tax credits from the business.

Consumer giants spurn risks to chase online subscribers
Consumer giants spurn risks to chase online subscribers

Major consumer companies including Unilever , Procter & Gamble and Nestle are chasing consumers who want food and household goods delivered automatically, even though this kind of business has not always worked. The companies are pitching new online subscription services, which promise stable revenues, lower delivery costs and valuable data about customers. The world's biggest packaged food company, Nestle, whose Nespresso coffee is already a sizeable subscription business, recently launched a subscription program for nutritional drinks in Japan and expanded ReadyRefresh, an online bottled water service, in the United States.

Supermodel Bundchen responds to Brazil
Supermodel Bundchen responds to Brazil's farm minister in Amazon spat

The Brazilian model replied to criticism from Agriculture Minister Tereza Cristina Dias by arguing that despite the existence of preserved areas, deforestation in the Amazon rainforest is on the rise. The letter, seen by Reuters on Thursday, challenged Dias to show progress toward sustainability, saying, "I will be very happy to announce positive actions that are taken in this direction." Dias had criticized Bundchen on a radio program on Monday for "saying bad things about Brazil without knowledge of the facts," and calling the country a deforester. Dias said the model should instead be highlighting achievements in preservation.

Apple, Amazon called out for "incorrect" Taiwan, Hong Kong references
Apple, Amazon called out for "incorrect" Taiwan, Hong Kong references

TAIPEI/SHANGHAI (Reuters) - One of China's top government-linked think tanks has called out Apple Inc, Amazon.com Inc and other foreign companies for not referring to Hong Kong and Taiwan as part of China in a report that provoked a stern reaction from Taipei. The Chinese Academy of Social Sciences (CASS) said in a report this month that 66 of the world's 500 largest companies had used "incorrect labels" for Taiwan and 53 had errors in the way they referred to Hong Kong, according to China's Legal Daily newspaper.

Leave a Comment

Your email address will not be published. Required fields are marked with *

Cancel reply

Comments

Top News: Economy

facebook
Hit "Like"
Don't miss any important news
Thanks, you don't need to show me this anymore.