Market Overview

A Preview Of The Biggest Earnings Reports This Week


As we are about to close this unprecedented year, the market is slowing down. While there are still reasons to be optimistic about 2021, namely due to the incoming vaccines, the near-term reality is still filled with implications of rising COVID-19 cases and business closures. Although this will be a lighter week in terms of earnings, there are three highlights to keep an eye on. They are Accenture (NYSE: ACN), FedEx (NYSE: FDX) and Nike (NYSE: NKE).

Can Accenture Embrace The Power Of Change?

Accenture will report before the market opens on Thursday. Wall Street expects earnings of $2.05 per share on revenue of $11.36 billion, compared to the year-ago quarter when earnings were $2.09 per share on revenue of $11.36 billion. Compared to other tech/software stocks, Accenture shares haven't participated in the robust market rally since the March bottom, but the stock has held pretty well despite a muted enterprise IT spending environment. Rising 17.5% in six months and up 17% year to date, the IT consulting company has outperformed the S&P 500 index in both spans. The question is, with the stock already up some 20% off its October low, presumably in part due to its buyback strategy, can Accenture be relied upon to pull out a meaningful recovery next year?

FedEx Is Expected To Deliver Away

FedEx Corporation will report after the market closes on Thursday. Wall Street expects earnings of $3.93 per share on revenue of $19.39 billion, compared to the year-ago quarter when earnings were $2.51 per share on revenue of $17.32 billion. The stock is up 110% in six months and up 92% year to date. It is trading near 52-week highs fueled by stronger-than-expected business activity, particularly in its domestic parcel capacity. Asia airfreight rates have risen sequentially, which provides support for its Express performance while the continued strength in e-commerce provides a strong revenue backdrop for FedEx to build upon. Analysts at UBS expect upside 2Q earnings and have consequently raised their estimate from $3.82 per share to $4.20 per share. On Thursday, positivity regarding profitability improvements within FedEx's ground segment is expected.

Just Like Its Swoosh, Nike Is Expected To Triumph

Nike is the Winged Goddess of Victory in Greek Mythology, and Nike's logo is derived from the goddess' wing, the so-called ‘ swoosh'. When Nike reports after the close on Friday, it is expected to reflect the win over the pandemic as Wall Street expects earnings of $0.61 per share on revenue of $10.55 billion. For the comparable quarter last year, Nike made $0.70 per share on revenue of $10.33 billion.

Its shares remain one of the better-performing names within the retail sector, rising more than 35% over the past six months despite the economic devastation the pandemic has inflicted upon consumers and retail in general. Although some might suggest that Nike shares have now run too far ahead of the company's fundamentals, besides being driven by the pandemic, Nike is benefiting from the fact that consumers across the globe are focusing more on health and wellness.

Nike is known for its strong brand name and innovation, so it should not be surprising that Wall Street sees Nike strongly positioned to capitalize on increased demand for its products. But, the company will need to justify that confidence with strong revenue forecasts, particularly as expectations are high for the holiday quarter.

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