Investors in the Nasdaq Composite (^IXIC -0.43%) have had a tough 2022, with the index mired in a severe bear market. Even after significant gains in recent weeks, the Nasdaq is far from recovering all of its lost ground, and it appeared that the index would suffer a modest decline when the market opened Monday morning as well.
Even as the bulk of earnings season is over, there are still some key Nasdaq component companies that are slated to announce their latest financial results this week, and what they say will have broader implications across the U.S. economy that could end up moving the entire stock market. In particular, Lululemon Athletica (LULU -1.64%) will provide a look at the key high-end consumer retail arena when it releases its quarterly report, while Broadcom (AVGO -0.54%) will have something to say about how the semiconductor industry is doing and what the outlook is for 2023.
Can Lululemon keep stretching higher?
Lululemon Athletica expects to hold its fiscal third-quarter conference call after the close of the regular trading session on Thursday afternoon. The report for the period that ended in late October should give valuable insight into how the athletic apparel specialist prepared for the key holiday season, and additional information could give shareholders a better sense of what Lululemon has seen from shoppers after the end of the quarter.
Lululemon’s fiscal second-quarter results for the period that ended July 31 showed that the retailer continued to rebound from the impacts of the COVID-19 pandemic. Net revenue was up 29% year over year to $1.9 billion, and comparable store sales rose 16%. Lululemon continued to get good 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 from the year-earlier period.
At that time, Lululemon also projected solid growth for the third quarter and the full fiscal year. In particular, its calls for third-quarter revenue of between $1.78 billion and $1.805 billion and for earnings of $1.90 to $1.95 per share are still largely consistent with what those who watch Lululemon’s stock expect to see on Thursday.
What investors will be most concerned about, though, is what Lululemon thinks about its early holiday season performance. With conflicting readings from other retailers about whether inflationary pressures are holding shoppers back from making purchases, what Lululemon says will give a valuable data point on the more affluent demographic group that is able and willing to pay premium prices for its merchandise.
Broadcom aims to keep holding up well
Broadcom is also scheduled to release its latest financials on Thursday afternoon after the closing bell on Wall Street. The semiconductor manufacturer has seen its stock come under pressure to some extent amid worries about the potential impact of an economic slowdown on the industry, but share-price declines have been muted compared to some of its peers.
Broadcom’s previous results from the fiscal third quarter 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 an even sharper 40% from the same period a year earlier. The company pointed to robust demand from enterprise customers going through digital transformation efforts as well as various service providers and cloud-centered customers, reflecting ongoing buildouts of data centers and broadband and wireless capabilities.
That release also projected that fiscal fourth-quarter revenue would come in around $8.9 billion. Investors still expect just about exactly that amount of sales, which would be about 20% higher than year-ago levels.
Even if Broadcom’s profits start to stagnate at present levels, an earnings multiple of around 13 to 14 looks quite attractive even in the highly cyclical semiconductor industry. Investors will want to hear how Broadcom intends to stave off overcapacity as its peers have ramped up production, and what the chipmaker says about customer demand could send ripples across the entire technology sector.
Dan Caplinger has positions in Lululemon Athletica. The Motley Fool has positions in and recommends Lululemon Athletica. The Motley Fool recommends Broadcom. The Motley Fool has a disclosure policy.