Stock market: the earnings of Cisco, NVIDIA and Walmart

The earnings season in the United States continues. The stocks of the companies that release their financial results will likely make big moves. You can trade these stocks with FBS (learn more) and make money!

Wednesday, May 15

Cisco

EPS forecast: $0.77

Revenue forecast: $12.9B

The networking giant has very impressive results in the previous quarter, and investors will want to see a trend. According to analysts, Cisco’s earnings has risen by 16.7%, while its revenue increased by 3.5%. The strong points of Cisco Systems (CSCO) are security, infrastructure platforms, and applications segments. In addition, Cisco is diversifying its business that now includes cloud computing, data centers, and the Internet of Things. This should make the company’s performance more stable.

Notice that Cisco is vulnerable to the increase in trade tensions between the United States and China as it produces some of its routers and switches in the world’s second-largest economy and sells them in the US. So far, the firm has managed to increase prices to offset the negative effect. However, it’s clear that if the situation keeps escalating it would be harder for Cisco to keep things under control.

Cisco’s stock reached an all-time high at 57.50 on April 14. Since then, the price has been undergoing a bearish correction. It has almost retraced 38.2% of the December-April advance: the level is now providing support at 50.85. Another support level is the 100-day MA just above 50.00 and 50% Fibo at 48.75. If the stock recovers, it will meet resistance at 54.20 (50-day MA, March high).

Thursday, May 16

NVIDIA

EPS forecast: $0.62

Revenue forecast: $2.2B

The forecasts for NVIDIA’s financial results are quite pessimistic. According to analysts, earnings have fallen by more than 60%, while revenue dropped by 31.50%.

If we try to explain this gloomy attitude, we may mention the recent deteriorating end-market conditions. Moreover, the company is suffering from the end of the cryptocurrency boom: the demand for NVIDIA’s GPU for mining purposes has significantly diminished. In addition, experts say that there’s a weakness in gaming equipment that represents a large part (about 40%) of the firm’s revenue. In their view, this weakness will likely continue. Finally, China is NVIDIA's second-largest market behind the United States. As a result, a trade conflict between the two economies will hurt the company.

The previous quarter was a disaster for NVIDIA: revenue fell by 24%, EPS plummeted by 48%. As the company has no power to change the unfavorable macroeconomic factors, investors will want to know what actions it plans to take to improve the situation where it can make a difference.

NVIDIA’s stock has topped with a “Head and Shoulders” pattern ahead of the descending 200-day MA. The next level to watch on the downside is 145, while 165 and 171 will provide resistance in case of pullback up.

Walmart

EPS forecast: $1.02

Revenue forecast: $125.15B

The sales of the world’s biggest retailer are increasing fast. Among the positive factors, it’s necessary to mention eCommerce sales backed by higher online grocery pickup, increased average tickets, and a broader assortment on the website.

At the same time, Walmart warned investors of industry disruption. In addition, as the firm is developing new sales and distribution channels, higher costs and expenses will have a negative impact on the company’s financial results. Notice that Amazon, Walmart’s major rival, has recently introduced 1-day shipping and Walmart may need hundreds million dollars of investments to math that move. Another negative factor is Walmart’s decision to reduce underage tobacco purchases. 

Besides EPS and revenue, investors will also look at Walmart’s traffic indicators to see how many people visit the stores. As for the online segment, the company has to improve its efficiency and profitability.

In April, Walmart stock met resistance from the line connecting 2018 highs in the 104.00 area and fell below the 100 mark. Support levels are at 97.70 (100-day MA), 96.50 (March low), and 95.00 (50-week MA).

Author: FBS Analyst Team

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