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Stocks fell last week, both Dow Jones Industrial Average (DJ INDICES: ^ DJI) and the S&P 500 (SNPINDEX: ^ GSPC) threw about 1% while remaining in slightly positive territory for the year so far.
A few widely held stocks will report operating results in the coming trading days, including Netflix (NASDAQ: NFLX), Procter & Gamble (NYSE: PG), and Fastenal (NASDAQ: FAST). Below, we’ll take a look at the top trends that could move these three stocks this week.
1. The outlook for Netflix
Its business boomed at the start of the pandemic, but investors are bracing for slower growth from Netflix in Tuesday’s report. The latest announcement from the leader in streaming video showed weak customer gains, which CEO Reed Hastings and his team attributed to a pull effect from the first half of the year when more than 15 million subscribers have joined the service.
Image source: Getty Images.
In October, management predicted another sluggish result as earnings slowed to $ 6 million in the fourth quarter from $ 8.8 million a year earlier. Yet reaching that figure would still leave Netflix with a record 34 million new subscribers this year to blow up the previous annual record of 29 million that was set in fiscal 2018.
The big question is where does growth go from here, given Netflix’s modest potential in the US market and growing competition in the global streaming space. These challenges are unlikely to hinder strong overall gains for the industry leader, especially given its growing list of exclusive content hits. Look for Hastings and his team to highlight some recent wins, such as Bridgerton and The queen’s gambit, Tuesday.
2. Procter & Gamble cash flow
Procter & Gamble moves up the profit plate on Wednesday, and expectations are high for the consumer staples giant’s report. P&G has not suffered much from COVID-19 inventory growth, as sales gains nearly hit double digits in the last quarter. P&G was beating most of its rivals before the pandemic, and that performance gap didn’t widen until 2020.
Management predicted at the end of October that P&G would still experience solid organic growth in the second fiscal quarter despite major headwinds, including COVID-19 outbreaks and the economic crisis in key markets like U.S. Beyond that peak, look for leaders this week to talk about their (and growing) cash performance goals. Rising profit margins combined with accelerated growth to bring P&G dividend and share buyback targets to $ 16 billion in fiscal 2021, even as the Dividend Aristocrat prepares to announce its 65th raise consecutive annual payout in April (reinforcing its additional designation of Dividend King).
3. Fastenal sales trends
The construction and industrial supplies giant will announce its results Wednesday morning. Given the rise in stock yields last year, investors expect a lot of good news in this update.
Its latest report contained conflicting growth signals, with weaker operating results coupled with signs of strengthening the industrial sector. Fastenal has reinforced the bullish stance since then, announcing in early December that sales growth accelerated in November.
We’ll find out on Wednesday whether the sourcing company expects that momentum to continue through early 2021, or if shareholders need to prepare for a potential economic downturn as COVID-19 continues to put pressure on its customers .
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