Yahoo Finance Can Nike Inc (NKE) Stock Reverse Its Fortunes This Week?
Don't sleep on this week. Yes, the holidays are around the bend. Yes, many investors have put things into cruise control now that the Federal Reserve has finally raised rates and the market is sitting on big, fat gains.
But the next few days are chock full of pivotal quarterly reports for several high-flying blue-chip stocks, as well as a couple of double-digit losers dying to turn things around heading into the New Year.
Here's a look at five on the radar heading into the final full trading week of 2016:
Nike (ticker: NKE). Nike's best shot at some sort of a 2016 comeback comes after Tuesday's bell, when the ubiquitous athletic apparel company reports fiscal second-quarter numbers.
[See: The 25 Best Blue-Chip Stocks to Buy for 2017.]
And it could use something. Anything. Despite a roaring bull run for U.S. stocks, NKE is down 18.53 percent -- within spitting distance of the 19.15 percent loss sustained amid 2008's market crash.
There's no secret behind the swoosh's swoon. Poor results have dogged Nike for several quarters now. Back in March, Nike's fiscal third-quarter revenues missed expectations, and gross margins fell short. In fiscal fourth quarter reported in June, Nike suffered another revenue miss, low future orders and a gross margin decline. And for fiscal first-quarter results in September, the bugaboo was gross margin that dropped from 47.48 percent to 45.5 percent.
Notice a pattern?
Nike has had issues with excess inventory for the lion's share of the year now, especially in Europe and Asia. However, Nike's brand president said during the first-quarter earnings call that margins are expected to return to normal "toward the second half of this fiscal year." But that still leaves quarter two.
Nike hasn't missed on earnings in years, and a projected 4.4 percent decline to 43 cents per share will be an easy bar to clear. So will the expected 5.3 percent improvement in revenues. But more weakness in gross margins could further spook the Street. Also, don't downplay the potential for reverse window dressing, as fund managers shed high-profile dogs like NKE -- which is in the bottom decile of the Standard & Poor's 500 index -- to make their annual reports look better.
FedEx Corp. (FDX). FedEx is among several stocks that could enjoy some regular old window dressing. Plus, the delivery company boasts a bevy of positive drivers heading into Tuesday evening's release.
JPMorgan initiated FDX shares at "overweight" last week, including a $233 price target on optimism over the company's ground network improvements. Barron's Johanna Bennett weighed in the same day, highlighting tailwinds such as a strengthening economy and escalating business from Amazon.com ( AMZN) and other e-commerce businesses. Later in the week, Cowen jacked up its price target on FedEx to $240 and reiterated its "outperform" rating.
FDX is already up more than 30 percent this year in a steady slope. Yes, it pulled back from all-time highs last week, but it also worked off overbought technical readings, priming it for a potential post-earnings run into 2016's end.
Analysts expect profit growth of 12 percent to $2.89 per share on 19.2 percent revenue growth to $14.9 billion. But also keep an eye on FedEx's ability to shoulder the holiday load. While FedEx and other deliverers are seeing record demand, the Wall Street Journal last week reported that both FDX and United Parcel Service ( UPS) were "straining to keep up with holiday shipping volumes that have blown past expectations." If FedEx gets even more behind, FDX could be at risk of some blowback.
Micron Technology (MU). Micron is one of several chipmakers that could enjoy some year-end portfolio varnish. Semiconductor stocks have gone bonkers in 2016, with the PHLX Semiconductor index up 36 percent, led by standout performances such as Advanced Micro Devices' ( AMD) 271 percent surge and Micron's 43 percent return.
MU's gains have been a case of supply and demand in DRAM and NAND flash memory. DRAM prices, which had dogged MU for a two-year stretch starting in early 2014, have snapped back this year. Moreover, tight supply was expected to send PC DRAM prices more than 30 percent higher during its fourth quarter, according to DRAMeXchange, which also projects supply bit growth to hit all-time lows in 2017. Similarly, NAND supply is expected to be tight thanks to an industry transition from 2D NAND to 3D NAND.
Analysts see Micron growing revenues 18.1 percent to $3.96 billion for fiscal first quarter, feeding a 16.6 percent improvement to earnings to 28 cents per share. Expect a beat-and-raise quarter to continue MU shares' momentum into year's end.
Winnebago Industries (WGO). Winnebago is a familiar brand but not necessarily a household name with investors. But Winnie has been a winner in 2016, up nearly 80 percent with a couple weeks left to go.
[See: The Best Energy Stocks to Buy for 2017.]
WGO started off 2016 with a troubling fiscal second-quarter report in which the company was unable to capitalize on low gas prices. But in the third quarter, sales of towables rocketed more than 62 percent to drive a robust top- and bottom-line beat, and in the fourth quarter, towables were 57.5 percent higher than the previous year -- kicking that concern to the ground.
Winnebago still has a pair of concerns in its class A motorized shipments and overall motorized backlog, which president and CEO Michael Happe touched on during the fourth-quarter earnings call. WGO will open a manufacturing facility in Oregon next year to deal with the former, while an RV dealers event in November was a "significant step forward" toward rectifying the latter.
Persistently low gas prices and economic strength should continue to carry Winnebago over light expectations for the fiscal first quarter, to be reported Wednesday morning. Analysts expect a penny-per-share drop to 31 cents in earnings, on 8.5 percent revenue growth to $232.34 million.
BlackBerry Ltd (BBRY). BlackBerry's precipitous long-term decline picked up some steam this year, as BBRY shares have shed about 20 percent. But perhaps the most important aspect of 2016 isn't the stock's continued losses -- but BlackBerry finally capitulating and exiting the hardware business.
In September, BlackBerry announced the choice to become a software company and license out its brand, and last week it signed a global licensing deal with Chinese manufacturer TCL Corp.
However, Credit Suisse's Kulbinder Garcha points out that the path will be bumpy. He sees hardware revenues (obviously) falling to zero in the long term, as well as service access fees -- which contributed $66 million in operating profits in the fiscal second quarter to a company that racked up a $355 million operating loss.
[See: 7 Things That Happened When Donald Trump Met With Tech Leaders.]
This quarter, BBRY is expected to produce a penny-per-share loss on revenues that will plunge nearly 40 percent to $331.92 million. Expectations are exceedingly low, but it will take something Herculean to turn sentiment around on BlackBerry before the calendar flips over to 2017.
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