Stocks rose last week as both the S&P 500 (SNPINDEX:^GSPC) and the Dow Jones Industrial Average (DJINDICES:^DJI) gained over 1% on hopes of an easing trade war between the U.S. and China. That boost left the Dow up roughly 16% so far in 2019 and the S&P 500 higher by 19%.
Third-quarter earnings season begins to ramp up over the next few trading days. Below, we'll take a look at the metrics that could send shares of Netflix (NASDAQ:NFLX), CSX (NASDAQ:CSX) and Coca-Cola (NYSE:KO) on the move in the week ahead.
Netflix CEO Reed Hastings has been telling investors for years that its long-term profitability will ultimately depend on the breadth of competition in the streaming market, which helps explain why Wall Street has soured on the growth stock lately. In its earnings report on Wednesday, Netflix's operating results won't be impacted by the new services by Apple and Disney since both are set to launch in the fiscal fourth quarter. Yet that shifting landscape will be on investors' minds as they read the streaming-TV leader's report this week.
Three months ago, Netflix announced a rare growth miss as subscriber gains landed well short of the 5 million that management had predicted. The scale of the whiff was concerning to investors at the time, and so was the comment by executives suggesting that pricing contributed to the issue. That pricing pressure is set to increase significantly as rival services launch at lower fees over the next few weeks.
In any case, Netflix's current forecast calls for subscriber growth to reaccelerate to 7 million this quarter. The company has never reported back-to-back misses on that core figure, and content wins like Stranger Things should help it avoid that letdown on Wednesday.
CSX's 2020 outlook
CSX reports its results on Wednesday, and investors have some big questions heading into this report. The train operator recently lowered its outlook to call for a slight sales decline in 2019 rather than a modest uptick. Yet CEO Jim Foote and his team said there was a potential upside to that guidance if business trends improved.
That improvement might show up in firmer volume, which fell 4% last quarter. If that figure stays weak, then investors can still count on a few financial wins to prop up the broader results. CSX is operating at near record efficiency, for example, and is collecting higher revenue per unit thanks to higher prices.
The stock's movement this week will ultimately depend on what management has to say about the rest of the year, though, and whether the latest demand for commodities and raw materials has executives feeling more -- or less -- confident about their growth potential heading into 2020.
Coca-Cola's market share
Coca-Cola has been dominating the soda industry lately and clawing away at market share from PepsiCo, thanks mainly to its hit Coke Zero rollout. But that streak of outperformance might be drawing to a close. The beverage titan reports earnings on Friday, just a few weeks after Pepsi announced impressive growth results and raised its outlook for the year.
Sure, Pepsi's gains are more driven by its snack food segment than its soda business right now. Yet that division is strengthening, too, and could mount a serious market-share challenge in the coming quarters.
That shifting competitive stance will keep the focus on Coke's organic sales growth this week. Ideally, the figure will remain near 6% or higher and include a healthy balance between rising prices and increased sales volumes. Weakness in any of those metrics would point to a tougher selling environment ahead.