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3 Things to Watch in the Stock Market This Week

By Demitri Kalogeropoulos – Dec 19, 2021 at 8:05AM

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Nike is one of several popular stocks set to announce earnings results in the shortened trading week ahead.

Markets fell last week, with both the Dow Jones Industrial Average (^DJI 0.43%) and the S&P 500 (^GSPC 0.57%) shedding roughly 2% of their value. That move pushed indexes off their record highs, but markets are still up significantly in 2021 as we enter the final two weeks of the year. 

A few major earnings reports are slated for the upcoming trading week. Let's take a closer look at three of the more highly anticipated announcements from this list, coming from Nike (NKE -0.32%), General Mills (GIS -0.08%), and Carnival Cruise Lines (CCL 2.73%).

A young woman working out at home.

Image source: Getty Images.

1. Nike's holiday outlook

Nike reports its fiscal 2022 second-quarter earnings results on Monday, smack in the middle of retail's biggest selling period of the year. That timing means the announcement will gain plenty of Wall Street attention this week.

The footwear and apparel retailer disappointed investors in its last quarterly outing, as sales growth slowed to 12% in fiscal Q1 compared to 17% in the prior full fiscal year. Investors are expecting more modest results this week as Nike works through its supply chain challenges. Sales are predicted to rise in the low single-digit percentage range to roughly $11.3 billion.

The key metric to watch will be Nike's digital sales, which grew 25% last quarter. Gross profit margin should rise despite surging costs, too, but Nike will still trail Lululemon Athletica on this score. Look for CEO John Donahoe and his team to highlight their increasing cash returns, especially in stock buyback spending. Yet, given the timing of this report, most of Wall Street will be eager to hear any estimates Nike might venture about the key holiday shopping quarter.

2. General Mills' profit margin

General Mills' stock has been recovering lost ground in recent weeks, but that rally will be put to the test when it reports fiscal 2022 second-quarter earnings results on Tuesday. The cereal and snack giant returned to sales growth last quarter after revenue dipped into negative territory. We'll learn this week whether there has been much of a shift in its two-year expansion rate of around 6%. That boost is faster than General Mills shareholders had seen before the pandemic struck, and management is expecting the faster growth rate to continue.

Meanwhile, margins are rising thanks to demand for premium snack products and pet food. Wins here might accelerate the company's earnings growth over the next few years, leading to solid returns for shareholders. Those returns this week mainly hinge on General Mills continuing to show elevated demand across its portfolio of snack, breakfast, and pet food products.

3. Carnival's bookings 

Carnival shares have declined sharply over the last six months, thanks in part to fresh COVID-19 fears. That's why investors will be closely following its Monday fourth-quarter earnings report for signs of any interruption in the cruise giant's recovery pace.

Carnival had been hoping to reach roughly 65% cruise capacity by the start of 2022 after crossing 50% in October. We'll learn this week whether fears around the new omicron variant impacted that bright outlook, either by reducing demand in the current quarter or lowering cruise ship bookings into mid- and late 2022.

Investors will also be watching Carnival's interest expenses given all the new debt it has taken on since pausing the business through most of the last two years. The travel specialist might see a historic rebound following that slump. But it will likely need to first navigate through a choppy selling environment in late 2021 and early 2022.

Demitri Kalogeropoulos owns Carnival and Nike. The Motley Fool owns and recommends Lululemon Athletica and Nike. The Motley Fool recommends Carnival. The Motley Fool has a disclosure policy.

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