Earnings reports move the stock market. But the vast majority of stocks tell investors their latest quarterly financials soon after each quarter begins, with the most-recent earnings season having peaked back in late October and early November. However, some high-profile stocks in a red-hot sector report later than most each quarter. As a result, investors will be watching three companies very closely as December begins. Below, we'll look at those three stocks and what to expect from them.
How the market fared Friday
Stocks moved higher on Friday, celebrating the holiday-shortened trading session that ended at 1 p.m. EST. The Dow Jones Industrial Average (^DJI -0.98%) just barely managed to make it into positive territory, but it settled for modest gains. The S&P 500 (^GSPC -0.46%) and the Nasdaq Composite did even better, reaching new all-time closing highs.
Today's stock market
|
Index |
Percentage Change |
Point Change |
|---|---|---|
|
Dow |
+0.13% |
+38 |
|
S&P 500 |
+0.24% |
+9 |
|
Nasdaq Composite |
+0.92% |
+111 |
Data source: Yahoo! Finance.
3 big earnings reports
There are three companies to watch closely next week, and they're all in the software-as-a-service space. Zoom Video Communications (ZM -0.99%), CrowdStrike Holdings (CRWD 0.13%), and DocuSign (DOCU 0.10%) are on the docket to provide their latest quarterly results.
Things start off with Zoom on Monday afternoon. Back in late August, Zoom projected that it would see sales of $685 million to $690 million in its fiscal third quarter, with earnings likely to come in at $0.73 to $0.74 per share on an adjusted basis. That would represent more than 300% growth in Zoom's revenue, but most shareholders expect to see the video-collaboration platform provider outpace its own guidance.
Image source: Getty Images.
What'll be more interesting than the results is how investors will react to them. The stock has fallen dramatically since coronavirus vaccine candidates started showing success, as many believe that Zoom won't hold on to its customers once the pandemic ends. Yet with the stock already lower, Zoom could support a big rebound if its numbers are strong.
Next up is CrowdStrike, which reports Wednesday afternoon. As with Zoom, investors in the cybersecurity specialist want to see stellar growth, especially in revenue. Sales jumped 84% in the company's fiscal second quarter. Back then, CrowdStrike gave guidance for $210 million to $215 million in revenue, representing growth up to around 70% at the high end of that range.
CrowdStrike's growth stems not just from new customers coming in but also from existing clients adding new functionality to their subscriptions. As CrowdStrike adds more features, it gives users more incentive to sign on and stay with the company. And it makes it harder for those clients to find alternatives from competitors. The stock is near all-time highs, and a strong report could give it the final push it needs.
Bringing up the rear is DocuSign on Thursday afternoon. In September, the electronic signature specialist reported a 45% rise in total revenue, with a big boost in adjusted net income. It projected sales of $358 million to $362 million in the third quarter, sustaining roughly the same 45% pace.
DocuSign became a must-have service during the pandemic, but electronic signatures were inevitable even when meeting in person wasn't as challenging as it is now. Looking ahead, investors will want to see how DocuSign's other products perform (most notably, its contract lifecycle management platform). Success there could signal an entire new growth industry for DocuSign, and another round of share-price gains for investors.
Be ready for earnings
Earnings are always important, but when it comes to SaaS stocks, everyone's watching. You'll want to be sure to keep an eye on Zoom, CrowdStrike, and DocuSign next week to see what they say about the health of the stock market.
