Stocks drifted lower last week as investors digested dozens of reports from the start of second-quarter earnings season. Both the S&P 500 (SNPINDEX:^GSPC) and the Dow Jones Industrial Average (DJINDICES:^DJI) shed less than 1% to hold near their highs for the year.
Hundreds of companies will post second-quarter earnings results over the coming week, which could mean volatility ahead for the broader market. Below, we'll take a look at the metrics that could send shares of iRobot (NASDAQ:IRBT), Coca-Cola (NYSE:KO), and Tesla (NASDAQ:TSLA) moving over the next few trading days.
Investors have been down on iRobot's stock since the company's first-quarter report in late April. That announcement included some potential warning flags with the company's business, including slowing sales growth, declining profitability, and a surge in inventory.
Executives said at the time that these issues didn't reflect demand struggles but instead were powered by temporary disruptions due to tariff-related cost increases and the shift toward shipping newer Roomba devices. By watching to see if sales and pricing trends returned to a double-digit growth pace, investors will find out on Tuesday whether that bullish reading played out during the quarter.
Looking further out, CEO Colin Angle and his team should have a better grasp on the 2019 outlook, especially following the Amazon Prime shopping day that prominently featured iRobot devices. A strong showing online might give executives confidence to affirm the full-year outlook that calls for about 18% higher sales in 2019.
There are good reasons to expect weaker sales results from Coca-Cola on Tuesday as compared to PepsiCo's recent report. Coke is more exposed to the sluggish demand trends around soda drinks, for example. The beverage giant also noted last quarter that its unusually high organic sales growth was in part due to a timing issue that brought orders in the first quarter -- which means gains will likely be closer to 3% than 5% in Q2.
Coke has been keeping overall revenue marching higher, thanks to rising average prices and strong demand in niches like sports drinks and water. That success, plus aggressive cost-cutting, has been enough to power healthy profits. However, investors likely won't reward the stock with market-beating returns until the company can show more robust sales volumes in the sparkling-beverage segment that accounts for the majority of annual sales.
Tesla reports its second-quarter results on Wednesday, and all the ingredients are present for a potentially explosive response by Wall Street. After all, shares have been especially volatile lately, cratering from highs over $350 per share but also rebounding sharply from an early June low of $200 per share.
The latest rally was powered by news that the company delivered just under 100,000 vehicles during the second quarter, including nearly 80,000 of its flagship Model 3 automobile. Production rates also improved sharply, which bodes well for future sales -- assuming the company can move closer toward profitability for its full lineup.
Tesla said in early July that demand still exceeds supply for the Model 3, and investors will get more details on that exact balance in this week's report. But Wall Street's focus will mostly be on the automaker's profitability, given that operating loss passed a painful $700 million in the fiscal first quarter.