Wall Street This Week: Rough Seas, Tough Book Business

Sonic America's Drive In Restaurant  Sign USA
From the planet's No. 1 cruise operator hoping to bounce back after some heavy fiscal weather, to a pair of homebuilders stepping up with fresh financials, here are some of the things that will help shape the week that lies ahead on Wall Street.

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.

Does Your Home Live Up to the American Average?
See Gallery
Wall Street This Week: Rough Seas, Tough Book Business
In 2013, the median lot size of a new sold single-family house was 8,596 square feet, or just under 0.2 acres. While that might not seem like a lot for you suburban homeowners, a regional breakdown shows that the small average size isn't due to urban inhabitants alone. The Northeast enjoys the largest average lot, at 13,052 square feet, while the less densely populated South and West lay claim to just 8,649 square feet and 6,796 square feet, respectively.
From a footprint of 1,650 square feet in 1978, the average American home has grown 50 percent, to 2,478 square feet. Yet tough times seem to be squeezing our expansionary attitude. Although new single-family homes sold in 2013 clocked in at a median 2,478 square feet, single-family homes completed in 2013 amounted to just 2,384 square feet. Homebuilder confidence has plummeted into pessimism in the last few months, hinting that the housing market's road to recovery might be rougher than expected.

While birth rates have held relatively steady for the past 40 years, everyone apparently needs more elbow room. The share of homes with four or more bedrooms has jumped from 27 percent in 1978 to 51 percent in 2013. And where would a bedroom be without a bathroom? While just 8 percent of 1978 homes had three or more baths, 37 percent of homes now fall in that category.

From 2008 to 2013, both the share of homes with four or more bedrooms and the share of homes with three or more bathrooms have jumped 10 percentage points, while median square footage is up 10.9 percent for the same period.

If there's one strong sign of new housing demand, it's home prices. After nose-diving during the Great Recession to a median sales price of just $216,700, home prices have been roaring back up. In 2013, the median sales price for a new single-family home was $268,900. But for those on the housing hunt, don't be discouraged. Home prices today still don't hold a candle to costs in 2006, according to the well-regarded Case-Shiller Home Price Index. In 2006, the index topped 200 before plummeting to less than 140, and current rates put the index just above 170.
It is America, after all. Our industrialized nation was built on the back of Henry Ford, and America is in no danger of breaking its automobile addiction. In 2013, a whopping 300,000 of the 429,000 new single-family homes sold included a two-car garage. And 98,000 new homes included a three-car garage -- the highest amount since 2007. Of all new homes built, only 10,000 failed to include a garage or carport.
American homebuyers are building bigger homes than ever before. But if there's one thing the recent recession has shown us, bigger isn't always better. Although 30 percent of Americans believe real estate is the best long-term investment, homeownership isn't for everyone. There are plenty of reasons to spend less or invest elsewhere -- and leave keeping up with the Joneses to Mr. and Mrs. Smith.
Read Full Story