Stocks gained significant milestones last week, so that both the S&P 500 and the Dow Jones Industrial Average are near record territory, having risen by just under 10% so far in 2018.
Nike (NYSE: NKE), McCormick (NYSE: MKC), and CarMax (NYSE: KMX) are in the spotlight with earnings reports set to publish over the next few days.
Nike’s Higher Pace
Nike will announce its results on Tuesday, and investors have every reason to expect good news from the apparel leader for sporting goods. It recently returned to sales growth in the core U.S. market after almost two years of slight declines, and management expressed positivity back in June that this bullish momentum will build into its new fiscal 2019. Its international locations are doing well, too, led by China and its 35% spike last quarter.
Nike’s profitability will be a sticking point to watch since that value is supposed to keep heading higher with the help of a huge boost of innovative product launches. Hiking gross profit margins will also be helped by growing inventory levels in the U.S., and by a changed toward the direct-to-consumer model.
McCormick’s Flavor For Price
Spicing and flavorings leader McCormick has reversed from the negative trend in the consumer packaged-foods industry with a lot of aid from its $4 billion buyout of the hit French’s and Frank’s condiment conglomerates. That buyout allowed sales to increase 19% last quarter even though its core spice business expanded by a more modest 3%.
Investors are looking for both segments to show growth in the quarter that just closed, in a demonstration of both McCormick’s attractive food niche positioning and its strong global marketing and distribution infrastructure. Look for profit margins to continue expanding, too, as sales shift toward the more profitable condiment brands.
CarMax Has Good Traffic
CarMax’s stock prices have rebounded over the past few months following the auto retailer showing better operating results in late June. Though sales fell at its existing locations in the fiscal first quarter, the chain’s 2.3% drop marked a strong improvement over the 8% dip in the prior quarter. CarMax said that a few other metrics that investors were happy to see included steady gross profit per vehicle and a growing store base.
CEO Bill Nash and his team have pointed to pricing challenges as a key factor in keeping a temporary lid on sales growth. New-car dealerships have been aggressive in their promotions lately, and that posture makes used cars relatively less attractive.
