Weekly Equities Forecast: Key Earnings Reports from Nike, Carnival, and Tesco
This week, investors are eagerly anticipating earnings reports from major companies, including Nike, Carnival, and Tesco. These reports could provide insight into the current market trends and consumer behavior, particularly in the wake of economic shifts and changing consumer preferences.
Nike Q1 Earnings Preview
Nike is set to announce its first-quarter earnings on Tuesday, October 1st. Analysts predict that the company will report earnings per share (EPS) of $0.53, alongside revenue of approximately $11.46 billion. This marks a significant decline from the previous year, where the company reported EPS of $0.94 and revenue of $12.9 billion during the same quarter.
The anticipated earnings come as Nike’s share price has fallen by 16% year-to-date, lagging behind the broader market trends. The company has issued a warning of a potential 10% decrease in first-quarter revenue, attributing this decline to a slowdown in digital sales, a weak wholesale order book, and disappointing sales figures in Greater China. This situation reflects a broader trend of diminishing demand for Nike products, which has been exacerbated by a perceived lack of innovation and softer consumer interest in one of its key markets.
Last week, Nike announced the retirement of its CEO, John Donahoe, who faced criticism for the company’s recent sales performance. Donahoe will be succeeded by Elliot Hill, a seasoned executive with over 30 years of experience at Nike, who previously retired four years ago. The market reacted positively to the news of Hill’s appointment, as he takes on the challenge of revitalizing the brand amidst increasing competition and a declining market share. Despite the current challenges, analysts remain optimistic about Nike’s long-term growth prospects, especially with new leadership at the helm.
How to Trade Nike Earnings
From a technical analysis perspective, Nike’s stock is currently trading below its multi-year falling trendline as well as the 50 and 200 Simple Moving Averages (SMAs). The stock has found support at the 2024 low of $70.00 and has made attempts to rebound. For bullish traders, a breakthrough above the 50 SMA at $93.00 and the falling trendline at $100 would signal a potential upward movement, with targets set at the 100 SMA around $117. Conversely, if the stock falls below the $70.00 support level, it could trigger further declines towards $58.00.
Carnival Q3 Earnings Preview
Carnival is also preparing to release its third-quarter earnings report, which is anticipated to reflect strong performance driven by a surge in demand, particularly in European and Alaskan markets. Analysts expect the cruise line to report an EPS of $1.16, an increase from $0.86 in the previous quarter.
Despite a relatively unchanged share price throughout the year, Carnival has demonstrated robust performance across various sectors, reaching record highs in several aspects of its business. The company has shown no signs of slowing down, with its operating margin returning to pre-pandemic levels. The strong performance is expected to persist through the latter half of this year, with improved booking positions for 2025 in terms of both pricing and occupancy rates, as Carnival takes proactive measures to accommodate high demand.
Additionally, the recent decision by the Federal Reserve to lower interest rates is likely to benefit consumer spending, particularly in sectors like travel and leisure. This economic shift could provide an additional boost for companies like Carnival, which rely heavily on discretionary consumer spending.
Tesco Earnings Outlook
In addition to Nike and Carnival, Tesco is also set to report its earnings this week. As one of the largest grocery retailers in the UK, Tesco’s financial results will be closely watched, especially in light of changing consumer habits and the ongoing challenges posed by inflation and supply chain disruptions.
Analysts are keen to see how Tesco has navigated these challenges and whether it has managed to maintain its market share amidst increasing competition from both traditional and online retailers. The company’s strategies to adapt to consumer preferences, including its focus on sustainability and digital transformation, will be critical in determining its performance in the current retail landscape.
As investors prepare for these earnings reports, the market will be looking for indicators of how these major companies are responding to economic pressures and consumer trends. The outcomes of these reports could significantly influence market sentiment and trading strategies in the coming weeks.
