3 Earnings Reports to Watch Next Week

Editor’s note: InvestorPlace’s Earnings Reports to Watch is updated weekly. Please check back next week for our latest earnings picks.

The stock market has rallied nicely in 2019 — and a solid earnings calendar has been a key reason why. Corporate earnings reports generally have been solid, if not impressive, and have been enough to offset the external fears that pressured stocks in the fourth quarter.

Next week is the final major week of earnings season. From there, the test begins. The one-time benefits of tax reform to earnings growth will be lapped. Retailer reports in March will give more clues as to the health of the consumer. But that sector hasn’t been strong enough to carry the market. Trade concerns still haven’t been resolved, and interest rate hikes still loom.

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If the nearly 8% gain in the S&P 500 so far this year is going to hold, another impressive week on the earnings calendar would go a long way toward cementing the bullish narrative. And there are a few earnings reports next week that both could matter to the market as a whole — and test investor appetites in key ways and in key sectors.

Two leaders in the marijuana space, Aurora Cannabis (NYSE:ACB) and Canopy Growth (NYSE:CGC), will release earnings next week. Results from consumer giants Coca-Cola (NYSE:KO) and CBS (NYSE:CBS) could move their respective industries.

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But there are even more interesting releases on the earnings calendar next week. These three earnings reports all could test just how aggressive investors are going to be. That in turn could signal how stocks will trade as earnings season fades away and outside worries perhaps return to the forefront.

Source: Shopify via Flickr

Shopify (SHOP)

Earnings Report Date: Tuesday, Feb. 12, before market open

Obviously, online retailing software provider Shopify (NYSE:SHOP) isn’t the most important stock in the market — not even close. But Shopify earnings on Tuesday morning offer an interesting test case for the small-to-mid-cap growth stocks that have soared in recent years.

Given its aggressive valuation, SHOP stock unsurprisingly fell sharply as the market soured in October. It has rallied just as strongly, however. SHOP has gained 47% from late December lows and is challenging an all-time high for the third time since May.

Whatever Shopify earnings are, the question is: how much are investors really willing to pay for any growth stock? SHOP trades at a whopping 16x 2018 revenue. Is this is a market where that type of valuation can hold — or even expand?

If it is, that’s a good sign for growth stocks (particularly Square (NYSE:SQ), which reports later this month). But if SHOP stock posts a strong quarter and upbeat 2019 guidance and gets dumped anyway, that could be a sign that growth stocks are approaching a new ceiling.

Source: Shutterstock

Under Armour (UA, UAA)

Earnings Report Date: Tuesday, Feb. 12, before market open

Apparel manufacturer Under Armour (NYSE:UA, NYSE:UAA), meanwhile, might test investors’ patience. Since bottoming in November 2017, UAA stock has posted strong, if choppy, performance. The market, at least so far, has been willing to wait for the company’s cost-cutting and internal improvement efforts to pay off.

Will it keep waiting? As I noted in December, UAA stock trades at a mid-to-high-teens multiple to its EPS in 2023, at least based on company targets. Meanwhile, the company can’t get to those targets without another four years of economic expansion — on top of the current, nearly decade-long, streak.