The stock market built up some positive momentum last week, but it's unclear whether the good times will last. At the market open on Monday morning, the Dow Jones Industrial Average (DJINDICES: ^DJI) had given back a tiny portion of its substantial recent gains, trading down about 0.25%.
Even though this earnings season is starting to wind down, some key components of the Dow Jones Industrials are set to report their latest results in the coming week. What Walmart (NYSE: WMT), Home Depot (NYSE: HD), and Cisco Systems (NASDAQ: CSCO) say about the conditions of their respective businesses will play a key role in determining whether last week's rally continues through this one, or whether the bear will growl once again.
Getting ready for retail
Tuesday morning will bring two key reports from the retail sector. Department store giant Walmart is set to release its results at around 7 a.m. ET, while Home Depot has historically gotten a slightly earlier start, having published its press release last quarter at 6 a.m. ET.
Walmart's numbers for its fiscal 2023 second quarter, which ended July 31, showed considerable strength amid a tough economic environment. Revenue rose 8.4% to $152.9 billion, and although operating income sagged 7% year over year due to higher costs, its net income of $5.15 billion was up 20% from year-earlier levels. However, the retailer warned at the time that conditions could continue to worsen for the rest of the fiscal year. Management projected that its fiscal 2023 sales would rise by about 4.5%, but forecast that adjusted earnings per share would fall by between 9% and 11%
Home improvement specialist Home Depot also held up well in its fiscal 2022 second quarter, posting revenue of $43.8 billion for the period that ended July 31. That top-line figure was up 6.5% year over year. Earnings of $5.05 per share compared favorably to year-earlier profits of $4.53 per share, and Home Depot was able to confirm that it still sees its fiscal year sales climbing 3% on mid-single-digit percentage gains in earnings per share.
Investors will be watching closely to see if ongoing macroeconomic pressures start to have bigger impacts on these companies' financials. Most analysts following Walmart's stock expect the company to post a year-over-year decline in earnings, albeit with continuing revenue growth. Meanwhile, Home Depot is expected to keep boosting its bottom line. Any disappointments on those fronts could put the Dow stocks' prices back on a downward slope, although investors will hope for better news to support the recent positive momentum.
Cisco looks to keep inching ahead
Meanwhile, Cisco Systems is set to announce its financial results after the closing bell on Thursday. Investors are hopeful that the networking giant will be able to keep bouncing back during what has been a tough year for tech stocks generally.
In Cisco's fiscal fourth quarter, which ended July 30, showed the pressures hitting the company. Revenue was down 0.2% year over year to $13.1 billion, with declines in internet-related revenue offsetting gains in the security and application optimization areas. Adjusted earnings dropped by 1% to $0.83 per share. However, annualized recurring revenue rose 8% to $22.9 billion, and Cisco continued to make headway in its transition toward getting more of its overall sales from subscription-based sources.
Investors are hopeful that its fiscal 2023 first-quarter report will show modest strength. Those following the networking giant anticipate sales growth of around 3% and a similarly small rise in earnings.
It's easy to overlook Cisco within the crowd of disruptive companies competing against it. However, the tech giant has a long legacy of success, and whatever it says Thursday has the potential to ripple across the entire technology sector.
