Stocks were mixed last week, with the S&P 500 (SNPINDEX:^GSPC) edging back into record territory, and the Dow Jones Industrial Average (DJINDICES:^DJI) adding to its losses. The Dow is now down just 2% so far in 2020 while the S&P is up 5%.
A few big-name stocks will announce earnings results over the next few trading days, including Palo Alto Networks (NYSE:PANW), Best Buy (NYSE:BBY), and Ulta Beauty (NASDAQ:ULTA). Below, we'll take a look at the key trends in the reports that could send their stocks moving this week.
Palo Alto's outlook
Palo Alto Networks stock is outperforming the market and keeping ahead of rival cybersecurity stocks like FireEye, but that trend will be tested when it announces operating results on Monday afternoon. The tech specialist gave investors a few reasons to feel optimistic back in late May as it reported a 20% sales increase, translating to a solid acceleration over the 15% increase it achieved in the prior quarter. Executives at the time predicted a significant demand lift over the next year or so as the coronavirus pandemic pushed more enterprises into digital working modes.
CEO Nikesh Arora and his team forecast sales gains of around 15% in fiscal Q4, which would put full-year growth at about 18%. The key figure to watch on Monday will be billings, which incorporates commitments from its software-as-a-service model. Robust demand here could convince Arora to issue a bright forecast for the new fiscal year that just started.
Best Buy's customer traffic
Best Buy will give investors a clear picture of demand for consumer electronics when it announces its results on Tuesday. Its last quarterly check-in showed declining sales overall, but the chain protected nearly its entire revenue stream by switching to online and curbside services during pandemic store closures.
That success has Wall Street predicting a quick return to overall growth this quarter, with revenue edging higher to nearly $10 billion. The period will show benefits from resumed store operations, along with the return of Best Buy's home appliance deliveries and installations. The appliance sales segment could see a sharp jump this quarter, given the surging demand other retailers like Home Depot have revealed in recent days .
Looking further out, CEO Corie Barry likely won't issue a detailed outlook for the second half of 2020. But Best Buy appears to be approaching the key holiday shopping season with demand trends all pointing in the right direction.
Ulta Beauty's margins
Ulta Beauty isn't expected to announce a return to growth in its Thursday report. After all, the beauty products industry remains under significant pressure as consumers scale back on shopping trips and find fewer reasons to use cosmetics in an era of social distancing and working from home. These challenges have investors predicting sales declines will improve only slightly in Q2, to 25% from 35% in the prior quarter.
There are some big questions about Ulta's path forward once the makeup industry begins growing again. The chain has slowed its store expansion pace to a crawl this year, but management said back in May that it still sees room for as many as 400 additional locations. That commercial real estate may be getting cheaper due to the pandemic, but Ulta first needs to show strengthening results at existing stores before it can claim a large opportunity to expand its physical presence in 2021 and beyond.