We're in the thick of earnings season. More than 400 companies will report quarterly results on Thursday, and some reports will merit watching more than others.
I'm paying close attention to what Royal Caribbean (RCL 0.04%), Redfin (RDFN -0.74%), and Block (SQ -1.57%) will have to say tomorrow. Let's go over why all three of these stocks have a lot to prove this season.
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Royal Caribbean
After two brutal years for the cruising industry, we're finally ready for some long overdue smooth sailing for Royal Caribbean. The country's second-largest cruise line reports on Thursday morning. It should be the first time that Royal Caribbean tops $1 billion in quarterly revenue since the industry was shut down during the pandemic, and this is actually a seasonally sleepy time for the cruising market.
Steep losses continue, but things should turn around in a hurry. The company might be deep in the red now, but it's trading for less than 14 times next year's projected earnings. There's a lot to like when it comes to Royal Caribbean. It has historically been the cruise line with the healthiest margins and organic growth. It was the only publicly traded cruise giant to see its stock move higher in 2021, even if 2022 is off to a crushing start for all three major players.
The first quarter that it will discuss on Thursday morning is important, but the real potential stock driver will be its outlook. Bookings should continue to improve heading into the peak summer season, and it wouldn't be a surprise to see passengers willing to pay a lot more. There's a lot of pent-up demand for cruising, and Royal Caribbean is well positioned to be a major beneficiary.
Redfin
The real estate market is hot, but the same can't be said about most real estate stocks. Shares of Redfin have plummeted 88% (yes, 88%) since peaking in February of last year. The disruptive listing platform is doing a great job of saving home sellers and buyers money, shaving $288 million in costs for them in 2021 when compared to traditional agent listing commissions.
Unfortunately it seems like it should be pocketing more money for itself. The quarterly losses have been substantial and widening. Analysts don't see Redfin turning a profit until 2026.
There are a lot of unknowns heading into Thursday afternoon's financial update. Will rising mortgage rates finally cool down the red-hot housing market? Redfin already saw one major rival bow out of the home-flipping market. Will it start to regain market share? After years of gaining at the expense of others, Redfin has seen its share of U.S. housing sales fall in back-to-back quarters. Will its timely acquisition of a rental-market portal specialist last year help smooth out results, or is that market also vulnerable after surging last year?
The questions are there. Redfin's quarterly open house for its financials is coming soon with answers.
Block
Fintech stocks have taken a hit, and Block isn't any different. The company formerly known as Square has seen its shares shed nearly two-thirds of their value since peaking last summer. Block is a major player across most next-gen financial services applications. Square has empowered everyone with the ability to process credit card payments through their smartphones or intuitive point-of-sale systems, and its Cash App has scaled quickly to become a major peer-to-peer mobile payments application.
Block is growing as a bellwether for fintech stocks. Back out the volatile low-margin crypto transactions, and revenue soared 51% in its latest quarter and 55% for all of 2022. Can it keep the momentum going? Block steps up with fresh financials shortly after Thursday's close. If it's a rough report, it's going to be a very tense annual investor day for the company later this month.
