3 things to watch in the stock market this week

IIt was another difficult time for investors last week as both the Dow Jones industry average (DJINDICES: ^DJI) and the S&P500 (SNPINDEX: ^GSPC) lose 5%. Most of this decline came after reports that inflation is still near a 40-year high, signaling further aggressive rate hikes by the Federal Reserve.

However, many individual stocks fared better, particularly on positive earnings reports. With that in mind, let’s preview the reports along the way from this week Kroger (NYSE:KR), Jabil (NYSE: JBL)and Adobe (NASDAQ:ADBE).

1. Kroger’s earnings prospects

Kroger’s stock took a hit after its rival Walmart (NYSE: WMT) last month lowered its 2022 earnings outlook, and we’ll hear on Thursday if the supermarket chain avoided those earnings challenges.

There’s good reason to believe Kroger can outperform its larger rival. The chain closed the growth gap last quarter, thanks in part to excitement about its fresh produce and ready meals niches. Track sales at comparable stores for signs that Kroger is gaining market share. That metric rose 3% in Walmart’s latest report.

Kroger navigated rising costs in early 2022, and investors are hoping it can continue that positive momentum in this report with the help of its vertically integrated supply chain.

When costs skyrocket, owning your own dairy farm, trucking company and retail network comes in handy. Follow Kroger’s earnings outlook, which currently calls for a large annual earnings increase, for evidence of continued pricing power.

2. Jabil’s operating margin

Electronics manufacturing specialist Jabil is due to report its latest earnings results on Thursday, and investors have big questions feeding into the report. The company exceeded expectations in its most recent performance, which showed an 11% increase in sales. Even more impressive was Jabil’s 23% increase in earnings per share.

Track Jabil’s operating profit margin for signs that the company is still benefiting from rising demand in its niche smartphone, cloud services, and automotive sectors. That metric was below 5% of sales last quarter, but has the potential to rise as prices rise.

Jabil has raised its outlook for 2022 back in March, and management now sees revenue of $32.6 billion, or about 11% up from 2021 Apple could set it up for even faster wins down the line.

3. Adobe’s growth rate

Despite setting new revenue and cash flow records in its most recent quarter, Adobe’s stock has fallen since this report in late March. Investors’ main concern is that growth will slow after two years of booming demand for its digital media products earlier in the pandemic.

That slowdown shouldn’t threaten the long-term prospects for Adobe, which reports second-quarter results on Thursday. In March, executives were forecasting revenue growth of about 15% for the period, compared to a 17% increase in the first quarter.

In addition to hitting those numbers, investors are hoping that Adobe could forecast better earnings prospects over time as more businesses and consumers shift creative work to the cloud services platform.

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Demitri Kalogeropoulos has positions at Apple. The Motley Fool has positions in and recommends Adobe Inc. and Apple. The Motley Fool recommends the following options: long January 2024 $420 calls on Adobe Inc., long March 2023 $120 calls on Apple, short January 2024 $430 calls on Adobe Inc., and short March 2023 $130 calls on Apple. The Motley Fool has one confidentiality policy.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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