3 Things to Watch in the Stock Market This Week – Motley Fool

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Stocks inched up last week to push further into record territory. The Dow Jones Industrial Average (DJINDICES:^DJI) and the S&P 500 (SNPINDEX:^GSPC) each gained less than 0.1% to keep their year-to-date growth at over 10%.

^SPX Chart

^SPX data by YCharts.

Some highly anticipated quarterly reports are set to come out over the next five trading days, including from Dow giant Nike (NYSE:NKE). McCormick (NYSE:MKC) and Vail Resorts (NYSE:MTN) will follow that up by releasing their updated operating numbers later in the week. Let’s look at what investors can expect from these announcements.

Nike laces up

Dow giant Nike will kick off its fiscal 2018 by announcing earnings results after the market closes on Tuesday. There’s a lot riding on this report, considering the sports-apparel titan endured slowing sales gains and falling profitability last year on the way to finishing dead last among the 30 members of the Dow in price appreciation.

This week, consensus estimates are calling for Nike to post roughly flat sales and lower profits. Beyond those headline results, investors will be watching for improvement in the core U.S. market now that retailers have brought their inventory levels back in line with reduced customer traffic trends.

Yet Nike executives see international markets — especially China — as leading revenue gains this year. They’re also doubling down on a direct-to-consumer sales channel that’s responsible for most of the retailer’s sales and profit growth. Finally, Nike’s reading on the health of the retail market will be scrutinized as we head into the critical holiday shopping season.

McCormick’s bet on condiments

McCormick announces its fiscal second-quarter results on Thursday morning. The spices and flavorings specialist’s stock has modestly trailed the market this year despite solid operating numbers. At its last quarterly showing, McCormick announced 7% revenue gains, even as profitability expanded.

A collection of spices heaped onto spoons.

Image source: Getty Images.

Investors will be looking for the company to affirm its bullish full-year guidance that calls for sales growth of between 5% and 7% and as much as a 10% boost to operating income. They’ll be even more interested to hear management’s updated thoughts on the $4 billion acquisition of Reckitt Benckiser’s food division that brought the French’s Mustard and Frank’s Hot Sauce brands into its portfolio.

This purchase has the potential to deliver solid long-term growth, but because of its high price tag, it could also result in a period of unusually weak cash returns as management prioritizes debt reduction over stock buybacks and generous dividend increases.

Vail’s summer strategy

Vail Resort’s stock has soared to new highs this year, and investors are optimistic that the entertainment and lodging giant can keep that momentum going when it posts results on Thursday. After all, the North American ski season was great for the business, the company said in early June. Ticket prices rose, and spending soared in the food, retailing, and lodging operating segments.

Vail’s acquisition of the Whistler Blackcomb property continues to pay dividends, and management plans to add to those gains with help from an improved data-collection system that should spur stronger season-pass sales.

A man holding skis looks out over a snow-covered mountain.

Image source: Getty Images.

In the meantime, the company just welcomed its first summer visitors to the Epic Discovery property at Breckenridge as part of Vail’s plan to build a more year-round business that isn’t as dependent on volatile winter weather conditions. Thursday’s results should give investors an update on that initiative and how it might smooth operating results, while adding to the company’s earnings power in the years ahead.

Demitrios Kalogeropoulos owns shares of Nike. The Motley Fool owns shares of and recommends Nike. The Motley Fool recommends McCormick and Vail Resorts. The Motley Fool has a disclosure policy.

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