Stocks fell significantly during the shortened holiday trading week, as both the S&P 500 (SNPINDEX:^GSPC) and the Dow Jones Industrial Average (DJINDICES:^DJI) shed nearly 4%. The declines pushed indexes back into negative territory for the year with just a few weeks left in 2018.
Broader market risk might drive continued price swings in the week ahead, but a few stocks stand to see even more volatility as a result of their earnings releases. Below, we'll look at the reports that could send shares of Guess? (NYSE:GES), Tiffany (NYSE:TIF), and Palo Alto Networks (NYSE:PANW) moving in the trading week to come.
An updated outlook for Guess?
Investors are expecting good news from Guess? in its earnings report on Wednesday afternoon. Shares soared following its last report in late August, after all. At the time, the retailer showed important progress in its turnaround efforts, with sales growth inching toward positive results in the key U.S. market and operating margins improving overall.
CEO Victor Herrero and his team said in their last quarterly report that their turnaround "has only just begun," and they predicted that profitability will continue improving over the next few quarters, while comparable-store sales turn positive across each of the retailer's geographic regions. Assuming Guess? can show progress toward those core goals this week, its stock could extend its positive momentum heading into the key holiday selling period.
Tiffany's international sales
Luxury jewelry specialist Tiffany is on pace to achieve its first year of rising sales since 2014, which would mark an impressive first step in its rebound plan. However, investors have turned cautious on the stock recently on fears of a demand slowdown in key international markets, including Japan and China. We'll find out on Wednesday whether Tiffany noticed weaker shopping trends in these areas or in its core U.S. division. Its last report showed few signs of a broader slump as global sales rose by 8%, or about the same pace as in the prior quarter.
It will also be interesting to see how well profit margins are holding up through the challenges of rising input costs due to international trade skirmishes and general inflation. Gross margin recently hit a new high, and another strong result here would suggest Tiffany is having no problem asking for full price for its latest lineup of high-end jewelry products.
Palo Alto Networks' profitability
Palo Alto shareholders have endured a volatile 2018 so far, with the cybersecurity stock soaring to an over 60% return before falling to single digits in recent weeks. Most of the slump can be attributed to the broader market unease that's hurt many tech-focused companies -- particularly those that had logged significant gains earlier in the year.
For its part, Palo Alto's management said back in September that sales should rise to between $625 million and $635 million in fiscal first-quarter results set to publish on Thursday. That would translate into gains of about 26%, or roughly on par with the pace it set over the prior year.
Beyond healthy sales gains, investors will be interested to see whether that growth takes Palo Alto another step toward bottom-line profitability in addition to positive cash flow. That financial target has proved elusive for the company in each of the last five fiscal years, but its scale might finally be approaching a high enough level to begin producing sustainable earnings, perhaps as early as fiscal 2019.