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3 Things to Watch in the Stock Market This Week

By Demitri Kalogeropoulos - Apr 25, 2021 at 6:52AM

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Apple is one of several rallying stocks set to announce earnings results over the next few trading days.

Stocks dipped slightly last week, as both the Dow Jones Industrial Average (^DJI 1.05%) and the S&P 500 (^GSPC 1.05%) shed less than 0.5%. The indexes stepped back from record highs but are still up by 11% each so far in 2021.

Earnings season continues in the week ahead, with many of the market's favorite tech stocks reporting results over the next few trading days. That list includes Tesla (TSLA 1.24%), iRobot (IRBT 1.80%), and Apple (AAPL 1.62%), whose announcements we'll preview below.

An engineer working on a computer chip.

Image source: Getty Images.

Tesla hits a new gear

Tesla stock has been volatile for the last year, and that volatility might hit a higher gear around its earnings report on Monday afternoon. We already know the first quarter was a good period for automotive sales, with deliveries soaring due to high demand for its all-electric vehicles. Monday's report will add important context around that growth figure, with metrics like cash flow and operating profitability.

Wall Street is eager to hear details from CEO Elon Musk about demand trends in China, along with updates on the reception of new innovations in the Model S and Model X. And manufacturing efficiencies are likely growing as production ramps up.

But the big question is whether Tesla can meet or surpass its ambitious sales volume goals for the year. Investors are clearly expecting good news on that score heading into Monday's report.

iRobot cleans up

Investors have high expectations heading into iRobot's earnings report on Tuesday. The specialist in robotic cleaning devices closed out a solid fiscal year in February with sales jumping 28% through early January. That spike was supported by federal stimulus checks, which helped power robust home maintenance spending. iRobot achieved higher sales volumes and rising prices for the period, suggesting a healthy operating environment.

But management is predicting weak earnings in 2021 as it shifts production out of China and ramps up manufacturing for the newest robotic vacuums. CEO Colin Angle and his team should update that profit forecast, along with their expectations for annual sales growth, as part of Tuesday's report. The Roomba maker will likely have positive comments about its outlook, assuming it avoided any major hiccups in its production or supply chain over the past few months.

Apple talks up the iPhone

Apple steps up to the earnings plate on Wednesday afternoon to report sales and profits for its fiscal second quarter. There could be some eye-popping figures in the announcement.

Most investors are expecting to see sales soar by 32% to $77 billion, in part thanks to high demand for its latest releases in the iPhone product line. The iPhone 12 has triggered a large upgrade cycle as smartphones move into 5G speeds.

Apple executives have been talking up their services segment in recent quarters, so look for more highlights in that booming division. Spiking demand in the App Store, Apple Music, and Apple Pay is helping keep customers engaged in its ecosystem. It also supports surging and stable cash flow. Apple generated a record $39 billion of operating cash in the first quarter, in fact.

CFO Luca Maestri might report similarly staggering numbers this week. But, as usual, the tech stock will likely react most directly to the short-term sales and earnings outlook that executives issue as part of their earnings announcement on Wednesday.

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Stocks Mentioned

Apple Inc. Stock Quote
Apple Inc.
AAPL
$138.93 (1.62%) $2.21
Dow Jones Industrial Average (Price Return) Stock Quote
Dow Jones Industrial Average (Price Return)
^DJI
$31,097.26 (1.05%) $321.83
S&P 500 Index - Price Return (USD) Stock Quote
S&P 500 Index - Price Return (USD)
^GSPC
$3,825.33 (1.05%) $39.95
Tesla, Inc. Stock Quote
Tesla, Inc.
TSLA
$681.79 (1.24%) $8.37
iRobot Stock Quote
iRobot
IRBT
$37.41 (1.80%) $0.66

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

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