By Emily Bary
Retailers will reveal more about the holiday-shopping season in the coming week, with the end of the earnings recession in sight.
Home Depot Inc. /zigman2/quotes/208081807/composite HD -0.08% is the lone Dow Jones Industrial Average /zigman2/quotes/210598065/realtime DJIA +2.05% component on the docket, and will be joined by plenty of other retailers that will add to the recent results from Walmart Inc. /zigman2/quotes/207374728/composite WMT -0.38% More than 440 members of the S&P 500 /zigman2/quotes/210599714/realtime SPX +1.36% have already delivered results and 41 more companies are set to join them in the week ahead, with non-retail reports largely focused on software.
Barring major issues in retail and cloud earnings, the S&P is set to snap the streak of earnings declines that it experienced for most of last year. Net income fell on a year-over-year basis during the first three quarters of 2019, but FactSet now models growth of 0.86% for the fourth quarter, taking into account the 1.3% growth from companies that have already reported earnings and analysts’ projections for the rest.
The projection for earnings growth comes in a reversal of sentiment from the start of reporting season, when analysts were projecting a continuation of the earnings recession, which exists when profits drop for two or more consecutive quarters.
Here’s what to watch for in the week ahead.
Walmart Inc. helped usher in retail earnings with a disappointing forecast, partly due to the coronavirus impact, but detailed the money it can save by getting rid of bags. Now a host of other retailers are preparing to report, including Home Depot and Macy’s Inc. /zigman2/quotes/201854387/composite M +12.93% Tuesday morning, Lowe’s Cos. Inc. /zigman2/quotes/205563664/composite LOW +0.65% and TJX Cos Inc. /zigman2/quotes/203136811/composite TJX +1.66% Wednesday morning, L Brands Inc. /zigman2/quotes/202062875/composite LB +8.99% Wednesday afternoon, and Best Buy Co. Inc. /zigman2/quotes/205918291/composite BBY +2.10% Thursday morning.
Several retailers recently detailed steps they’re taking to adapt to the changing world of commerce: Macy’s recently detailed plans to close stores and cut jobs, while L Brands is selling a majority stake in Victoria’s Secret. These names are among 16 bricks-and-mortar retailers that Credit Suisse Chief U.S. Equity Strategist Jonathan Golub has on his list for the coming weeks, out of 40 total, and he said earnings per share for the category are expected to rise 0.9%. Those that have already posted results have beaten bottom-line expectations by 4.5%, he wrote.
Salesforce.com Inc. /zigman2/quotes/200515854/composite CRM +0.44% , the biggest name in cloud software, will kick off a wave of software results Tuesday afternoon. There was some concern about the corporate-spending landscape late last year, but early results from companies like ServiceNow Inc. /zigman2/quotes/202729495/composite NOW -1.22% have inspired more confidence in the software sector.
Box Inc.’s /zigman2/quotes/208773138/composite BOX -3.69% will report a few days after peer Dropbox Inc. /zigman2/quotes/205896836/composite DBX +1.20% issued encouraging results and forward commentary that pushed shares to their largest single-day gain on record. Box faced questions throughout 2019 about its spotty execution, so the forecast will be closely watched Wednesday afternoon.
Read: How coronavirus could delay the 5G revolution even more
Other software names include Nutanix Inc. /zigman2/quotes/207209171/composite NTNX -0.86% on Wednesday afternoon, as well as Dell Technologies Inc. /zigman2/quotes/203822527/composite DELL -0.69% , VMware Inc. /zigman2/quotes/209864107/composite VMW -2.32% , Autodesk Inc. /zigman2/quotes/209828392/composite ADSK +3.33% , and Workday Inc. /zigman2/quotes/201157610/composite WDAY +1.61% on Thursday afternoon.
• One of the most exciting names outside software and retail is Beyond Meat Inc. /zigman2/quotes/211617595/composite BYND -0.71% , which has landed new deals that will require the maker of meat alternatives to explain how it will build capacity to serve its various partners. Bernstein analyst Alexia Howard said that the early results from Beyond Meat’s partnership with McDonald’s Corp. /zigman2/quotes/203508018/composite MCD +3.04% is of particular interest to investors in Thursday afternoon’s report.
See also: Dunkin’ customers spend more when they buy Beyond Meat sandwich
• Chinese internet companies Baidu Inc. /zigman2/quotes/209050136/composite BIDU +4.87% and iQiyi Inc. /zigman2/quotes/203657421/composite IQ +3.84% also report Thursday afternoon, and could provide indications of how extended quarantines due to the coronavirus impacted online entertainment consumption in China. Booking Holding Inc. /zigman2/quotes/203576210/composite BKNG +4.29% may discuss the coronavirus impact on travel Wednesday afternoon. Rival Expedia Group Inc. /zigman2/quotes/202291990/composite EXPE +5.84% predicted $30 million to $40 million in reduced earnings, but Booking has more international exposure than Expedia.
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• Square Inc. /zigman2/quotes/205989440/composite SQ +4.51% faces a “high bar” with its Wednesday afternoon report, according to Keefe, Bruyette & Woods analyst Steven Kwok. He wrote that Square’s “margin of outperformance” shrunk in 2019, leading to more muted performance for Square’s stock, and he said investors are likely looking for a continuation of Square’s “beat and raise story” given the stock’s valuation and Square’s plans to keep investing in various growth areas.