Stocks rose during the shortened trading session last week, as both the Dow Jones Industrial Average and the S&P 500 gained over 1% to hold near their all-time highs. Pandemic news dominated investors' attention, as COVID-19 outbreaks grew while vaccine developments appeared to put an end to the virus threat in reach.
Meanwhile, highly anticipated earnings reports are set to hit the news wires over the next few trading days, including from Zoom Video Communications (ZM 3.24%), Five Below (FIVE -0.12%), and Kroger (KR -2.32%). Below we'll take a look at what might send their stocks moving this week.
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Zoom's engagement
Zoom tees up its earnings report on Monday afternoon in what will be a widely followed announcement on Wall Street. The videoconferencing specialist has seen soaring growth as the pandemic pushed business and personal activity communications online. Sales jumped 355% last quarter, and its customer base shot to over 370,000 businesses, up 458% year over year.
CEO Eric Yuan and his team said in late August that they saw this elevated growth trend extending into fiscal Q3, with sales projected to rise over 300% to between $685 million and $690 million.
In addition to the customer addition metrics that Zoom typically reveals, investors will be watching churn rates, which describe the percentage of users who cancel their subscriptions. An uptick there might imply a potentially hard landing for the business in late 2021 as COVID-19 vaccines allow for more normal working patterns.
Five Below's holiday outlook
Five Below has been one of the rare specialty retailers to outperform during the COVID-19 crisis. While temporary store closures hurt sales early in the year, the youth-focused retailer bounced right back to growth in its fiscal second quarter, as sales inched higher by 2%. Investors are hoping for evidence of further progress in Five Below's Wednesday earnings announcement.
Executives said in early September that the third quarter got off to a strong start. On average, analysts who follow the stock are predicting sales will rise by about 18% to $445 million. Within that metric, keep an eye on the balance between store expansion and sales growth at existing locations. Five Below needs gains in both areas to support management's aggressive plans for building out its retailing footprint.
The stock's moves might ultimately depend on the holiday season projection that CEO Joel Anderson and his team issue for what's likely to be an unusual shopping period ahead.
Kroger's customer traffic
Kroger announces its earnings results on Thursday morning, and investors are expecting head-turning growth metrics from the leading grocery store chain. Rivals like Walmart and Costco have reported slowing sales gains in recent weeks, but demand for consumer staples remains elevated. On average, Wall Street analysts are forecasting a revenue boost of 7% this quarter.
That prediction includes volatile moves in gasoline sales, so you're better off following Kroger's comparable-store sales trends. Executives said in mid-September that comps would land above 13% for the full year, or just slightly lower than last quarter's 15% growth rate.
But Kroger warned that there was an unusually wide range of possible results due to major variables around COVID-19 outbreaks and the health of the broader economy. With three additional months of demand data to look at, the chain should be able to issue a more detailed 2020 outlook on Thursday.
