Three earnings reports to watch next week, March 2-8, 2019

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The earnings calendar is beginning to deteriorate. Several key companies continue to publish their results next week, and other reports on their results will follow later this month. But for the most part, the season of results is over.

And it was solid. According to the data of the research firm Factsetas at 22 February, 69% of S & P 500 components had exceeded earnings expectations, with 61% estimating expected revenues by consensus. Investors have noticed that the S & P 500 has gained 11% since the beginning of the year. The losses in a lousy month of December were overcome.

Even with the results season coming to an end, intriguing results reports are to be watched next week in three important areas. But from a more general point of view, the question facing the market could be: what to do now? The main concerns that led to the weakness of the end of 2018 – worries about interest rates, tariffs, macroeconomic fears – have not just dissipated. Over the next seven weeks or so until the results schedule is restored, these risks may come back to the fore.

In this context, next week's revenues for these three companies are significant as they could highlight the short-term focus not only of the actions involved, but of the industry as a whole. A grocery store chef will highlight the health of an industry where retailers and suppliers are struggling. High-performance software could show how the market is focused on technology valuation. And a major retailer will give another data point about the impact of "omni-channel" efforts in this competitive space.

The earnings calendar may be resetting, but next week's earnings will still be important for the market.

Salesforce.com (CRM)

Date of the income statement: Monday, March 4, after the closing of the market

On Wednesday, I detailed the importance of Salesforce.com (NYSE:CRM) not only to the CRM stock, but to the market as a whole.

The case here is simple. Salesforce.com operates an excellent business. The question is – and has long been – evaluation. With the return of CRM to unprecedented highs and trading at 60 times forward earnings, it is feared that at some point investors will question multiples. And that counts not only for the Salesforce stock, but also for enterprise stocks that have returned to unprecedented heights, including Working day (NASDAQ:Day) and Splunk (NASDAQ:SPLK).

Square (NYSE:SQ) was in a similar situation last week. And despite disappointing expectations in the first quarter, investors also quickly offered these high-priced shares a boost. A similar treatment of CRM stocks after next week's gains may suggest that the risk technology trade is back for good.

Target (TGT)

Date of the income statement: Tuesday, March 5, before the opening of the market

Release of T4 on Tuesday Target (NYSE:TGT) is one of the largest revenue reports of the company for some time. Target is clearly trying to keep up Walmart (NYSE:WMT) as a legitimate rival of brick and mortar Amazon.com (NASDAQ:AMZN). The results for the holiday season will determine whether Target is really competing – or stuck at a distant third place.

Directions for next year (FY 2019) will be closely monitored. Target has invested heavily in its "omnichannel" capabilities in recent years and some of the early benefits are expected to begin in fiscal year 19. If Target can convince the market that these huge investments are driving growth, a multiple 13 times the advance leaves plenty of room for expansion.

On the other hand, if the fourth quarter results and forecasts for 2019 suggest that Target is spending more to stay in place, any hope of seeing the TGT stock go back to September's high of $ 90 will be disappointed.

There are reasons for caution before next week's results. Walmart apparently released an explosive quarter last week – and has already made the gains that followed the report. As I wrote at the end of January, Target did not prove that it was really at the level of its two rivals.

The target profit will probably have to be exceptional to advance the TGT shares. If so, the reaction could show how confident investors are in retailing. At the moment, there seems to be still a lot of mistrust.

Kroger (KR)

Date of the income statement: Thursday, March 7, before the opening of the market

The grocery sector as a whole has been struggling in recent years. And it was actually Kroger (NYSE:KR) who started the first leg down. In June 2017 – the day before Amazon's acquisition of Whole Foods, which led to a further fall in space – Kroger's disappointing forecasts rocked the sector.

Kroger's stock has returned to a level close to its pre-report level. The rest of the industry has not generally been so lucky. Margins continue to shrink due to deflation of major commodities – and stiff competition from Walmart, Aldi and others.

This pressure has not only touched grocery stocks. Kroger and others have stepped up their efforts to boost private label sales. This has in turn affected the brand operators, in particular Kraft Heinz (NASDAQ:KHC), whose shares have suffered after a catastrophic earnings report from his own last month.

Kroger's recipes next week will therefore be watched closely by peers, but also by food manufacturers. Can grocery store operators generate profit margins again? And how much will they have to put pressure on their suppliers to get to this point? These are key questions for two important sectors of the market. These questions will get answers on Thursday morning.

At the time of writing this article, Vince Martin has no position on the titles mentioned.