Editor’s note: InvestorPlace’s Earnings Reports to Watch is updated weekly. Please check back next week for our latest earnings picks.
The earnings calendar is light next week. First-quarter results have come and gone — and in their wake there’s a clear divergence in the market. In sectors like semiconductors and retail, earnings reports cemented investor pessimism. Elsewhere, reasonably strong performance kept most stocks near all-time highs.
That is, until recently. Tariff fears led stocks to pull back after new all-time highs were reached in late April. (Those highs were reached, not coincidentally, near the start of earnings season. At that point, earnings reports had mostly come from larger companies.) The market has rebounded in recent sessions, but even that strength appears more due to hopes of a “Fed put” than investor confidence.
Until the earnings calendar picks up again in mid-July, external concerns are going to drive broad markets. That certainly looks to be the case next week. But struggling sectors could get some much-needed relief with strong reports from key members. A major semiconductor player and a large apparel manufacturer will try and provide some semblance of good news. Earnings from a leader in a cyclical consumer sector will give insight into consumer confidence — and perhaps stoke buying in a group investors have fled of late.
It’s not going to be a huge week, as far as earnings go, and market attention likely will be elsewhere. But for investors looking to buy the dips, these three reports are worth watching.
Earnings Reports to Watch: Thor Industries (THO)
Earnings Report Date: Monday, June 10, before market open
Since the beginning of 2018, shares of RV manufacturer Thor Industries (NYSE:THO) have gone almost straight down. THO shares have fallen more than 60% over that span, and again threatened a multiyear low last month.
There are some self-inflicted wounds here. Thor has missed badly in each of its last two earnings reports. Dealers are cutting back on purchases, leading Thor to lessen production — a move which has pressured margins.
But there are broader factors at play as well. High-dollar cyclical consumer stocks are struggling. Rival Winnebago (NYSE:WGO), too, has pulled back over the past 18 months, though its decline is less than 40%. Boating stocks like Brunswick (NYSE:BC) have been hit hard in recent weeks. Tariffs are raising worries about costs, but there are also concerns about demand.
These stocks, after all, are among the most cyclical in the market. And with the economic expansion in the U.S. heading into its eleventh year, investors are increasingly worried that the cycle is going to turn. Thor hasn’t helped its own cause with recent performance, but cyclical sentiment remains a factor.
And so fiscal Q3 earnings will be interesting. THO shareholders will be watching to see if Thor can get back on track. If it can, there is potential upside, as Will Healy detailed in April. But even if that good news arrives, the intriguing question for the rest of us is if investors will care — or if cyclical fears will offset any good news Thor can deliver.
Oxford Industries (OXM)
Earnings Report Date: Wednesday, June 12, after market close
Apparel might be the most-disliked industry in the market — and that’s saying something. Oxford Industries (NYSE:OXM) will be fighting that trend when it reports fiscal-first-quarter results after the close on Wednesday.
Retail as a whole was slaughtered during earnings season, with special punishment reserved for apparel plays. Abercrombie & Fitch (NYSE:ANF), Gap (NYSE:GPS) and Tilly’s (NYSE:TLYS), among others, fell hard. Any weakness seemed to lead to a swift sell-off.
Not even good news seems to be rewarded. American Eagle Outfitters (NYSE:AEO) handily beat estimates with its Q1 report on Wednesday morning. AEO stock opened trading up more than 6% — and closed the day up 0.1%. It then fell over 5% on Thursday.
For Oxford, which owns the Tommy Bahama, Lilly Pulitzer and Southern Tide brands, Wednesday’s report thus looks downright dangerous. It seems likely that only a monster quarter will move OXM higher. A repeat of what happened to American Eagle — strong earnings and no response — might suggest that apparel plays aren’t going to bounce any time soon.
Earnings Report Date: Thursday, June 13, after market close
Earnings from Broadcom (NASDAQ:AVGO) represent another test, this time for semiconductor stocks. AVGO stock hasn’t been immune to the pressure on the sector. It has pulled back sharply of late, falling about 17% since early May.
But Broadcom could go a long way toward inspiring confidence toward chip stocks — and potentially reversing some of those declines. The company’s diversified business gives its exposure to several end markets and gives its management credibility in assessing the health of those markets. Strong commentary from Broadcom executives could move not just AVGO, but other chip stocks, most of whom are much cheaper than they were a month ago.
Of course, the reverse is true. If Broadcom struggles, that means most of the sector is going to stay under pressure. With major chip plays like Nvidia (NASDAQ:NVDA), Intel (NASDAQ:INTC) and Micron (NASDAQ:MU) facing company-specific issues of their own, a more dire outlook for the sector won’t be welcome. And chip stocks beyond AVGO could get even cheaper.
As of this writing, Vince Martin is long shares of Gap Inc. He has no positions in any other securities mentioned.