Stocks dropped last week, as both the Dow Jones Industrial Average (^DJI 0.06%) and the S&P 500 (^GSPC -0.22%) shed roughly 1%. That still left indexes near all-time highs, and up more than 13% so far in 2021.
Earnings season ramps up with many of the market's favorite stocks reporting results over the next few trading days. That list includes Netflix (NFLX -0.51%), Domino's Pizza (DPZ -0.08%), and Tractor Supply (TSCO -0.02%), whose announcements we'll preview.
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Netflix's new outlook
The stakes are high for Netflix on Tuesday. The streaming-video giant significantly undershot management's subscriber forecast last quarter and could potentially announce its first ever back-to-back growth miss in its Q2 report this week.
That's not likely, though. Co-CEO Reed Hastings and his team back in April issued a modest forecast for the period, with user gains slowing to just 1 million compared to 10 million a year earlier during peak COVID-19 lockdowns. Hitting that goal would put Netflix at just 5 million subscriber additions in the first half of the year, compared with 13 million in the same period in 2019 and 26 million in that period last year .
Investors have stayed bullish on Netflix stock through this slowdown because of its industry-leading size and engagement metrics, rising profitability, and improving cash flow trends. Yet the company will need to show, through its updated outlook on Tuesday, that its early 2021 stumble was just a temporary hangover from the pandemic growth spike.
Domino's market share
Domino's steps up to the earnings plate on Thursday for its highly anticipated Q2 announcement. The pizza delivery leader has had a great run over the past few years, including by steadily winning market share for about a decade heading into the pandemic.
Yet COVID-19 sparked a flood of new entrants into the home delivery space –from restaurant chains like Darden Restaurants to third-party aggregators like Uber. This shift has Wall Street worried that the pizza chain's epic growth run might be ending.
Domino's has huge competitive assets it can lean on in this environment, though. Its blanket coverage of most geographies helps keep delivery times down, and customer satisfaction up, for example. And its highly efficient store base allows it to compete aggressively on price.
Look for these factors to help keep market share creeping higher for Domino's this week while the chain's improving cash flow gives executives more flexibility to ramp up dividends and stock buybacks in late 2021 and beyond.
Tractor Supply's margins
Tractor Supply was ideally situated for consumer demand changes that COVID-19 brought last year, but the rural-lifestyle retailer also created its own luck lately. Great execution around digital fulfilment and merchandising, for example, helped it dramatically expand its sales footprint in the past year. Comparable-store sales jumped 39% in Q1 after soaring 23% for the full 2020.
Monday's announcement should show slowing growth as Tractor Supply laps some of the strongest demand spikes of the earlier phases of the pandemic. But most investors who follow the stock are still expecting sales to rise.
Tractor Supply may show continued profitability boosts, too, as prices rise and more spending shifts toward the online channel. Finally, look for a potential outlook upgrade from CEO Hal Lawton if all of its new customers stayed engaged with the business during the peak spring selling season.
