Investors in the Nasdaq Compound (^IXIC -1.07%) have had a difficult 2022, with the index mired in a severe bear market. Even after significant gains in recent weeks, the Nasdaq is far from having recovered all the lost ground, and it appeared that the index would also suffer a slight decline when the market opened on Monday morning.
Even though most of the earnings season is over, some key Nasdaq companies are expected to report their latest financial results this week, and what they say will have broader implications for the US economy that could end up shifting the entire stock. market. Especially, Lululemon Athletica (LULU -1.97%) will provide insight into the key high-end retail arena when it releases its quarterly report, while Broadcom (AVGO -0.89%) will have something to say about the state of the semiconductor industry and the outlook for 2023.
Can Lululemon keep stretching higher?
Lululemon Athletica plans to hold its fiscal third quarter conference call following the close of the regular trading session on Thursday afternoon. The report for the period ending at the end of October should provide valuable insight into how the sportswear specialist has prepared for the key holiday season, and additional information could give shareholders a better idea of what Lululemon saw from buyers after the end of the quarter.
Lululemon’s second fiscal quarter results for the period ended July 31 showed the retailer continued to rebound from the impacts of the COVID-19 pandemic. Net revenue increased 29% year over year to $1.9 billion, and comparable store sales increased 16%. Lululemon continued to see strong results from its direct-to-consumer channel, where comps were up 30% from year-ago levels. Adjusted earnings of $2.20 per share were 33% higher than the prior year period.
At that time, Lululemon also forecast solid growth for the third quarter and full year. In particular, his calls for third-quarter revenue of $1.78 billion to $1.805 billion and earnings of $1.90 to $1.95 per share are still broadly in line with what those watching the stock from Lululemon expect to see Thursday.
What will concern investors most, however, is what Lululemon thinks of its performance at the start of the holiday season. With conflicting readings from other retailers on whether inflationary pressures are keeping shoppers from making purchases, what Lululemon says will provide a valuable data point on the more affluent demographic who are able and willing to pay premium prices. for his goods.
Broadcom wants to continue to hold up well
Broadcom is also expected to release its latest financial statements Thursday afternoon after the closing bell on Wall Street. The semiconductor maker saw its stock come under some pressure due to concerns over the potential impact of an economic downturn on the industry, but the share price decline was moderate compared to some of his peers.
Broadcom’s previous fiscal third quarter results that ended in July showed record strength. Revenue jumped 25% year-over-year to $8.46 billion, and adjusted earnings of $9.73 per share were up even more than 40% from the same period a year earlier. The company highlighted strong demand from enterprise customers embarking on digital transformation efforts as well as various cloud-centric service providers and customers, reflecting the ongoing build-out of data centers and broadband and wireless capabilities. .
The release also forecast fiscal fourth quarter revenue to be approximately $8.9 billion. Investors are still expecting roughly exactly that amount of sales, which would be about 20% above year-ago levels.
Even if Broadcom’s earnings start to stagnate at current levels, an earnings multiple of around 13 to 14 looks quite attractive, even in the highly cyclical semiconductor industry. Investors will want to know how Broadcom intends to avoid overcapacity as its peers ramp up production, and what the chipmaker says about customer demand could have repercussions for the entire tech sector.
Dan Caplinger has positions in Lululemon Athletica. The Motley Fool holds positions and recommends Lululemon Athletica. The Motley Fool recommends Broadcom. The Motley Fool has a disclosure policy.
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