The stock market could really use some good news this week. Investors have watched major market benchmarks give up most of their summer gains in the past couple of weeks, and sentiment as the fall season begins seems to be tepid at best.
Often, financial reports from high-profile companies can provide the impetus for a market reversal. This week, investors will hear the latest from athletic footwear giant Nike (NKE 0.19%) as well as semiconductor chipmaker Micron Technology (MU 2.92%). Both companies have enough pull in their respective industries to motivate a potential turnaround if the news is good. Here's what to expect from both companies as investors start to get ready for earnings season to ramp up in earnest in the next few weeks.
Nike lacks a spring in its step
Shares of Nike have performed terribly in 2023, losing about 25% of their value since the beginning of the year. The athletic apparel pioneer has faced a number of challenges that have held back its ability to sustain past growth rates, and shareholders seem concerned about how quickly Nike will be able to return to its winning ways.
Nike released its fiscal fourth-quarter results three months ago for the period ended May 31, and at that time, shareholders didn't like what they saw. Nike managed to boost its overall sales by 5% from the year-earlier quarter, even as the strong U.S. dollar produced some headwinds on its international business. However, substantially higher costs for materials and shipping weighed on profits, as did more extensive markdowns to clear out inventory. The resulting drop in earnings made investors anxious about sluggish guidance for the new fiscal year.
Indeed, most of those who follow Nike don't have very high expectations for the fiscal first-quarter results that the company expects to release on Thursday afternoon. Nike itself said that revenue was likely to be flat to up low-single-digit percentages for the quarter, and consensus forecasts call for earnings to take a 25% hit and come in at $0.70 per share.
Nike has been a stalwart growth stock for a long time, consistently producing modest yet significant gains in sales and profits. It has endured tough periods before, and many investors have confidence that even if Nike doesn't report strong results this time around, the future still looks bright for the athletic footwear giant.
Can Micron keep climbing?
Meanwhile, Micron Technology has moved the other way, posting gains of nearly 40% in 2023. The memory chip producer has undoubtedly gotten a boost from the same trends in artificial intelligence and cloud computing as other semiconductor stocks, but its coming report Wednesday afternoon will provide a good read on whether Micron really deserves to be part of the bull market among chipmakers.
Investors have anticipated better times for Micron for a while now. The company's fiscal third-quarter report for the period ended June 1 was ugly, with revenue plunging by more than half from year-ago levels and Micron posting an adjusted net loss of $1.57 billion. Yet some investors were heartened by the fact that sales seemed to hit bottom during the period, with Micron anticipating further incremental rebounds in subsequent quarters.
Indeed, Micron expects revenue of between $3.7 billion and $4.1 billion for the fiscal fourth quarter on which it will report this week, and that would likely represent some additional progress toward regaining its past peak performance. Yet Micron won't wipe out its losses, with calls for between $1.12 and $1.26 per share in red ink.
Micron does have potential to capitalize on artificial intelligence, but its memory chip business is notoriously cyclical. Investors will need to see conditions across the industry start to tighten up in terms of supply before Micron will truly have a chance to return to its former glory.
