5 Things to Watch on Wall Street This Week
1. Showtime for BlackBerry: It's been two months since BlackBerry (BBRY) unveiled its BlackBerry 10 mobile operating system and the two smartphones that will usher in the company's best shot at a turnaround.
After a long wait, stateside fans will finally get a chance to buy the BlackBerry Z10. The new handset will be available through AT&T (T) on Friday. Verizon Wireless will begin stocking the phone six days later.
BlackBerry can't afford to miss. Revenue is falling, and profitability is taking an even bigger hit. After peaking with a base of more than 80 million global subscribers, BlackBerry's popularity is starting to wane. If BlackBerry's Z10 and Q10 smartphones don't sell briskly, it's hard to fathom the market giving the smartphone pioneer another crack at a turnaround.
The good news is that BlackBerry revealed last week that a partner placed an order for a million phones, representing the largest purchase order in company history. The challenge now is for the partner to actually sell those devices.
2. When You're Here You're Family: Olive Garden and Red Lobster may be punch lines for restaurant jokes, but the casual dining chains have a funny way of continuing to pack in the hungry during peak lunch and dinner hours.
Darden Restaurants (DRI) is the parent company of both chains. Darden also watches over smaller concepts including LongHorn Steakhouse, Bahama Breeze, and Seasons 52.
There's been a fear that high gas prices and the end of the two-year payroll tax cut will eat into casual dining, and Darden confirmed that business was starting to slow last month. Darden conceded that same-store sales were off by 4.5 percent during the holiday quarter at its three largest concepts (Olive Garden, Red Lobster, and LongHorn).
We'll get a clearer snapshot when Darden reports on Friday, but analysts are already braced for a decline in profitability. Olive Garden may have unlimited breadsticks, but its bread -- as in money -- has been limited.
3. There Goes the Neighborhood: The housing industry has bounced back in a major way, and homebuilders KB Home (KBH) and Lennar (LEN) have been major beneficiaries.
Both developers will be reporting this week, and analysts see improving results at both companies.
It's easy to see why the fundamentals are improving for the builders. As home prices move higher, real estate developers with fixed building costs can command higher prices for their new construction. It also only helps that homebuyers honor their contracts. Both KB Home and Lennar saw way too many of their contracts cancelled by nervous home buyers when prices were falling.
Things may not be exactly perfect here. Mortgage rates have crept to their highest levels since this past summer. It's still cheap to own a home, though the borrowed buck doesn't go as far as it did a few weeks ago.
Investors will want to see if KB Home or Lennar offer any insight on which way the real estate market is trending.
4. FedUp: Some companies offer more than just snapshots on their own fundamentals.
When FedEx (FDX) reports, the market's really getting a taste for how the economy in general is holding up. Are folks buying more merchandise and willing to pay a premium for speedy delivery? Is Corporate America brimming with missives that are too important to merely fax or email to recipients?
FedEx has felt the pinch of escalating gas prices. Its jets and trucks don't run on water, you know. FedEx has historically passed on those increases to its customers in the form of fuel surcharges, but it isn't always easy to pass on every uptick in expenses.
Analysts see earnings declining on a mere 3 percent increase in revenue when FedEx reports on Wednesday. Investors better hope that the delivery specialist can deliver something better.
5. Dress for the occasion: Ross Stores (ROST) reports on Thursday.
The company behind 1,091 Ross Dress For Less stores has been a beneficiary of penny-pinching consumers. Its namesake stores stock brand-name apparel at discounted prices. Ross Stores did held up well during the holiday quarter, and the retailer did boost its profit guidance twice in recent months.
However, the real concern will be the current quarter. Ross surprised investors earlier this month with news that same-store sales in February were negative. We're in trouble if even penny pinching is out of fashion.
Motley Fool contributor Rick Munarriz has no position in any stocks mentioned. The Motley Fool recommends FedEx. The Motley Fool owns shares of Darden Restaurants. Try any of our Foolish newsletter services free for 30 days.