Wall Street This Week: Rough Seas, Tough Book Business
Monday -- Sonic Boom
A whopping 3 million people pull into a Sonic (SONC) every day, and unlike some of its larger burger-flipping peers, Sonic's drive-in eateries are growing in popularity. Same-restaurant sales rose 1.4 percent in its most recent quarter, despite the same wintry weather that many of its peers blamed for holding back their own numbers. Clearly, there's some retro charm in Sonic's throwback theme.
On Monday afternoon, the 3,500-unit chain will kick off the first trading week of summer with its fiscal second quarter report, which is expected to be solid. Sonic is targeting comps to remain positive and for margins to continue improving throughout the fiscal year.
Tuesday -- Cruising Takes a Bruising
Carnival (CCL) operates the world's largest fleet of cruise ships across various brands. The seas have been rough for Carnival since its Costa Concordia tipped over along the coast of Europe two years ago, killing 32 people. Last year, we had the "poop cruise" sailing for the Triumph, followed shortly thereafter by botched sailing for the Carnival Dream.
However, the past several months have been uneventful, and that's favorable news for Carnival as it tries to spruce up its image and clean up its reputation. Carnival has had to price its fares aggressively to overcome the damage to its reputation, and with fuel prices high, it isn't easy steering through the choppy waters of the cruising industry. Analysts foresee a modest uptick in revenue, but they are ultimately calling for a sharp drop in profitability.
%VIRTUAL-article-sponsoredlinks%Wednesday -- Off the Books at Barnes & Noble
It isn't easy being a bookseller these days. More folks are forsaking hardcovers and paperbacks for digital publications. Barnes & Noble (BKS) has remained relevant in that arena through its Nook business, but Nooks have been losing market share to the Kindle and full-featured tablets. If turning a profit in the digital business was hard before, it's going to be nearly impossible with the Nook in decline.
Barnes & Noble reports Wednesday morning. Wall Street's expecting another quarterly deficit out of the 663-store chain on another drop in sales.
Thursday -- Just Swoosh It
Nike (NKE) has been a consistent performer. The athletic footwear giant has been able to cash in on the success of its brand-name shoes to roll out performance apparel and other product lines, but those haven't always been such big hits. My Nike FuelBand rapidly became a dinosaur with a busted display that doesn't seem to warrant replacing. However, more often than not, the Nike brand sells itself.
Analysts expect to see flat earnings growth on a 10 percent uptick in revenue. It's probably a good sign that Nike has beaten Wall Street profit targets consistently over the past year.
Friday -- Home on the Range
KB Home (KBH) reports Friday morning. The housing market's revival has been good for all of the homebuilders, even some developers that were teetering on the brink of bankruptcy during the financial meltdown. KB Home is expected to post a healthy profit, reversing a small deficit from the same period a year earlier.
KB Home isn't the only real estate developer reporting this week. Lennar (LEN) checks in a day earlier. Checking out back-to-back reports should provide a good snapshot of the still buoyant housing industry. Be on the lookout for new orders as well as cancellations of existing orders. If the frothy market is showing signs of peaking, you will see it there first.
Motley Fool contributor Rick Munarriz has no position in any stocks mentioned. The Motley Fool recommends Nike. The Motley Fool owns shares of Barnes & Noble and Nike.