Spotlight On Nike, Samsung, Carnival, And A REIT IPO Debut

Summary:

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The release of the U.S. jobs report for September on Friday will be the highlight of the week ahead. Economists expect 140K job additions for the month and for the unemployment rate to keep steady at 4.2%. Hourly earnings growth is seen edging lower to +0.3% month-month from the +0.4% pace in August. While the labor market has been soft, Deutsche Bank thinks the low level of jobless claims suggests that the September employment report should be decent enough to support the soft-landing scenario. On Seeking Alpha, Stratos Capital Partners reasoned that if the bullish vibe picks up again in the market, investors can overcome the S&P 500 Index’s bias for assigning a higher weighting to companies with larger market capitalization by choosing to invest in equal-weighted indices that include the same set of S&P 500 companies, such as the Invesco S&P 500 Equal Weight ETF (RSP) or the Invesco Russell 1000 Equal Weight ETF (EQAL).

A major port strike could become a factor next week unless a new contract is not approved by the International Longshoremen’s Association. As many as 36 East Coast and Gulf Coast ports could be impacted. Shipping costs, including freight, warehousing, and drayage rates, could rise due to increased demand for alternative routes if an extended strike were to take place.

The earnings calendar in the week ahead is headlined by Nike’s (NYSE:NKE) earnings report on October 1. Opinions are divided on the athletic apparel stock. Seeking Alpha analyst Luca Socci recently presented the bearish case on Nike, while Noah’s Arc Capital Management pointed to reasons a turnaround can take place. Carnival (CCL), Levi Strauss (LEVI), and Constellation Brands (STZ) also report as the consumer sector stays in the spotlight. Investors will also be watching China-focused stocks such as Dada Nexus (DADA), JD.com (JD), XPeng (XPEV), ZEEKR Intelligent (ZK), NIO (NIO), and Alibaba (BABA) after sizzling stimulus-fueled rallies over the last week.

Earnings spotlight: Monday, September 30 – Carnival (CCL) (CUK). See the full earnings calendar.

Earnings spotlight: Tuesday, October 1 – Nike (NKE), Paychex (PAYX), McCormick & Company (MKC), Lamb Weston (LW), and Cal-Maine Foods (CALM) See the full earnings calendar.

Earnings spotlight: Wednesday, October 2 – Levi Strauss (LEVI), RPM International (RPM) and Conagra Brands (CAG). See the full earnings calendar.

Earnings spotlight: Thursday, October 3 – Constellation Brands (STZ). See the full earnings calendar.

Volatility watch: Options trading volume is elevated on Cassava Sciences (SAVA) and ProKidney (PROK). The most overbought stocks per their 14-day relative strength index include Tectonic Therapeutic (TECX), Capricor Therapeutics (CAPR), and American Healthcare REIT (AHR). The most oversold stocks per their 14-day Relative Strength Index include International Battery Metals (OTCPK:IBATF), Autozi Internet Technology Global (AZI), and Target Hospitality (TH). Short interest is elevated on SoundHound AI (SOUN) and Plug Power (PLUG).

IPO watch: FrontView REIT (FVR) is expected to price its IPO and begin to trade next week. The Dallas-based company plans to raise $251 million and be valued at $508 million at the midpoint of its expected price range of $17 to $21. FrontView REIT is involved in acquiring, owning, and managing outparcel properties that are net leased to a diversified group of tenants. Aerospace engine aftermarket services company StandardAero (SARO) and EV parts maker ZJK Industrial Co. (ZJK) are also expected to start trading. StandardAero has filed to raise $100 million in an IPO, although the final figure could be higher. ZJK is raising $6.3M by offering 1.3 million shares at a price range of $4.00 to $6.00.

Investor events: Samsung (OTCPK:SSNLF) will hold its SDC24 developers conference in San Jose on October 3. The tech giant is expected to introduce its latest software, services, and platforms. Several sessions will go over Samsung’s AI innovations. Other notable investor events include ResMed’s (RMD) Investor Day, EnerSys’ (ENS) update on its lithium cell factory, Affirm Holdings’ (AFRM) fireside chat, and Apollo Global Management’s (APO) Investor Day. FedEx (FDX) will hold its Forward Service Provider Summit, which will include Motive and Workhorse Group (WKHS) as exhibitors.

Nike earnings preview Nike (NKE) will release its FQ4 earnings report on October 1. The athletic apparel giant is forecast to report a year-over-year drop in revenue of 8.5% to $11.65 billion, driven lower by weakness in North America. Footwear revenue is expected to be down 9.4% during the quarter, and apparel revenue is seen falling 7.9%. Nike is also expected to disclose a gross margin rate of 44.4%, operating income of $882.1 million, and EPS of $0.52. Shares of Nike (NKE) have been in rally mode after the recent announcement that Elliott Hill was returning to the company to be the new CEO. Hill has an all-hands employee meeting planned for October 14 on his first day on the job. However, before Hill takes the reins, analysts are wary that Nike (NKE) could rip off the Band-Aid with its FQ1 and full-year guidance update to rattle investors. The company frequently issues its guidance during the earnings conference call and provides an in-depth outlook by region and product type. The update from management on trends in China will also be closely watched by other consumer companies with a higher exposure to the nation, including Starbucks (SBUX), Estee Lauder (EL), and Skechers (SKX).

Spinoff watch: Curbline will start trading on the New York Stock Exchange under the ticker symbol CURB on October 1 after spinning off from SITE Centers (NYSE:SITC). Curbline is expected to be capitalized with $600 million of cash at the time of the spin-off in addition to a $400 million unsecured line of credit, a $100 million unsecured draw term loan, and no indebtedness. Notably, Curbline will be the first public real estate company exclusively dedicated to convenience properties, which are described as retail sites or strip malls without a big-box or grocery store to anchor them. Also next week, South Bow Corporation will begin trading as a standalone company after spinning off from TC Energy (TSX:TRP:CA). Shareholders will receive one new common share of TC Energy and 0.2 of a common share in South Bow Corporation in exchange for each common share of TC Energy held. After the business separation, TC Energy will continue to focus on natural gas pipeline infrastructure, power and energy business driven by nuclear and hydro energy storage, while South Bow will focus on the liquid pipeline business.

Auto watch: The week ahead will see deliveries reports pour in from Tesla (TSLA), Nio (NIO), XPeng (XPEV), Rivian Automotive (RIVN), Li Auto (LI), and Lucid Group (LCID). Quarterly sales reports from General Motors (GM), Ford Motor (F), and Toyota (TM) will also be closely watched. As for the broad U.S. sales market, total new-vehicle sales for September, including retail and non-retail transactions, are projected to reach 1,164,900, a 1.8% decrease from September 2023 on a selling day adjusted basis, according to a joint forecast from J.D. Power and GlobalData. New-vehicle total sales in Q3 are projected to reach 3,882,600 units, a 0.2% increase from a year ago with two fewer selling days in the mix. Notably, total retailer profit per unit, which includes vehicle gross plus finance and insurance income, is expected to be $2,294, down 29% from September 2023. Rising inventory was noted as the primary factor behind the profit decline, and fewer vehicles are noted to be selling above the manufacturer’s suggested retail price. For its part, S&P Global Mobility highlighted that the month-to-month volatility in the SAAR reading reflects the current state of automobile demand. “New vehicle sales remain stuck in neutral,” said Chris Hopson, principal analyst at S&P Global Mobility. “The overall tenor of the auto demand environment remains one of consistent, but unmotivated volume levels as consumers in the market continue to be pressured by high-interest rates and slow-to-recede vehicle prices, which are translating to high monthly payments,” he added.

Editor’s Note: This article discusses one or more securities that do not trade on a major U.S. exchange. Please be aware of the risks associated with these stocks.