Are you watching the stock market today?
If you like to focus on stocks that may move the market, pay attention to these stocks in the stock market today. The earnings reports from Alibaba (BABA Stock Report), Deere (DE Stock Report) and Foot Locker (FL Stock Report) could indicate where the market is heading before we head into the long weekend.
Alibaba Earnings: 2 Things To Watch
Alibaba will report its earnings on Friday before the market opens. Investors are hoping for signs of a recovery in China’s largest e-commerce company. The company reported Q3 earnings in the midst of Covid-19, and the company warned at the time that the pandemic would disrupt logistics and hurt sales. However, since China has reopened most of its economy, many experts predict that those sales woes would subside.
E-Commerce Recovery On Its Way?
The Covid-19 crisis is prompting more businesses to source products online as most brick-and-mortar shops were forced to close during the lockdown. China was the first country to be badly hit by the novel coronavirus back in December, disrupting the international supply and demand of goods. But as time went by, things are now increasingly under control.
More essential businesses are now allowed to operate. For instance, the demand for personal protective equipment (PPE) on the platform grew seven times from January to April. The company also saw wholesale demand climb for some “less obvious” categories from February to March, mostly home products and DIY furnitures. In fact, the Alibaba.com platform saw a higher growth rate in the US than the rest of the world. This is a promising sign that the e-commerce operation is slowly going back to full speed.
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Alibaba’s Cloud Expansion To Extend Its Leadership Position
Apart from being China’s largest online retailer, it also has a growing footprint in various industries. Notably, advertising, cloud services, healthcare and other lines of business. The cloud computing segment stands out and deserves attention. This segment received a significant boost with the stay-at-home measures and work-from-home arrangements. To cope with the ‘new normal’, Alibaba announced plans in April to spend about $28 billion on its cloud unit over the next three years. These investments could deepen the cloud unit’s losses in the near term, but offer the promise of longer-term gains.
Will Equipment Sales Bring Volatility To Deere Stock?
American industrial giant Deere & Co. is reporting fiscal second-quarter earnings ahead of the opening bell today. The company initially saw huge revenue grow from $5.9 billion in 2017 to $11.5 billion in 2019. The massive growth can be largely attributed to the Wirtgen acquisition, and higher shipment volumes. The humming economic growth and robust housing market in the US bolstered the segment growth.
Then came the coronavirus pandemic, which then leads to an economic downturn with almost 38.6 million Americans currently unemployed. Despite farmers buying more equipment for their fields, would this be sufficient enough to offset the losses in other segments? Some analysts may argue that agricultural machinery demand hasn’t taken a big hit. Yet, the overall machinery sales could decrease significantly given the halt in global manufacturing activities.
Is Deere & Co. Sharing Caterpillar’s Fate?
So far this year, Deere stocks are down about 20%. How should we guess the impact of Covid-19 to the equipment maker? It’s worth taking a look at Caterpillar (CAT Stock Report) for industry comparison purposes. Caterpillar has already reported earnings, with a bigger-than-expected dip in sales. The fact that Deere will feel the pinch from Covid-19 isn’t news anymore. But the real question investors could be asking is, just how big could the impact be?
Is Foot Locker’s (FL) Numbers Going Down?
Shoe retailer Foot Locker is scheduled to report an adjusted loss of 18 cents per share on $1.32 billion in revenue. In mid-March, Foot Locker temporarily closed its stores in North America, EMEA and Malaysia. FL stock was trading at its 5-year low at $18.32 per share shortly after the announcement.
One day before the earnings announcement, FL stock moved higher, possibly catching a tailwind along with the rest of the apparel sector following TJX Companies’ (TJX Stock Report) upbeat commentary. TJX had closed all of its stores during the pandemic, but started reopening them on May 2. When the stores reopened, they recorded very strong initial sales.
After all, people like to be able to see and hold a product before purchasing it. No matter how convenient e-commerce can be, many would still prefer to shop in the traditional settings. That said, could the initial strong sales seen in TJX be temporary resulting from the side-effect of staying home for too long? Only time will tell.