Earnings: 3 Hot Stocks to Watch in April

MarketsMotley Fool

Earnings season is almost in full swing -- and a range of notable names are lined up to report results this month. Three worth watching in the coming weeks are social network Facebook (NASDAQ: FB), financial-technology specialist PayPal (NASDAQ: PYPL), and coffee giant Starbucks (NASDAQ: SBUX).

The stakes are high for all three companies, as their stocks have been soaring. Facebook, PayPal, and Starbucks have seen their stocks rise 35%, 27%, and 18% respectively so far this year. Can these companies' latest results live up to expectations?

Continue Reading Below

Here's an overview of some key items to watch when these companies report their latest quarterly results.

Facebook

The key narrative to watch for Facebook remains the company's decelerating revenue growth. In the social network's first quarter of 2018, revenue was growing 49% year over year. But by the fourth quarter of last year, Facebook's quarterly year-over-year revenue growth rate had slowed to 30% year over year.

This deceleration is expected to persist. In its fourth-quarter earnings call, management said it expects its first-quarter year-over-year revenue growth rate to "decelerate by a mid-single digit percentage on a constant currency basis compared to the Q4 rate." Analysts, on average, expect Facebook to report first-quarter revenue of $14.98 billion, representing 25.2% year-over-year growth.

Facebook will report its first-quarter results after market close on Wednesday, April 24.

PayPal

Mobile-payments and financial-technology company PayPal will also report its first-quarter results after market close on Wednesday, April 24.

While the company's financial results will be important, investors should be sure to check on the company's customer data. Active account growth, in particular, is foundational for the company's long-term health.

The company added 13.8 million net new active accounts in the fourth quarter of 2018. However, net new active account additions were 10.9 million when excluding new accounts from acquisitions. Notably, this was higher than the 9.1 million active accounts added in the third quarter of 2018.

Investors should also check in on the company's fast-growing peer-to-peer payments app, Venmo. The app processed $19 billion in total payment volume in Q4, up 80% year over year. Can the app keep up this growth?

Starbucks

Two important items for Starbucks investors to watch when the coffee company reports its fiscal second-quarter results later this month are its progress with building more digital relationships and its comparable-store sales growth.

The company has seen strong growth in its rewards members recently. Members were up 15% and 14% year over year in the company's fourth quarter of fiscal 2018 and first quarter of fiscal 2019, respectively. Look for Starbucks to post similar growth in the key metric in fiscal Q2.

The metric most likely to make or break the quarter, however, will be Starbucks' comparable-store sales growth. Comparable-store sales were up 4% year over year in fiscal Q1 -- an acceleration from 3% growth in the prior quarter. Given management's guidance for comparable-store sales growth to be between 3% to 4% for the full fiscal year, investors should look for the metric to be within this range.

Starbucks reports its fiscal second-quarter results after market close on Thursday, April 25.

10 stocks we like better than FacebookWhen investing geniuses David and Tom Gardner have a stock tip, it can pay to listen. After all, the newsletter they have run for over a decade, Motley Fool Stock Advisor, has quadrupled the market.*

David and Tom just revealed what they believe are the ten best stocks for investors to buy right now... and Facebook wasn't one of them! That's right -- they think these 10 stocks are even better buys.

See the 10 stocks

*Stock Advisor returns as of March 1, 2019

Randi Zuckerberg, a former director of market development and spokeswoman for Facebook and sister to its CEO, Mark Zuckerberg, is a member of The Motley Fool's board of directors. Daniel Sparks has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends Facebook, PayPal Holdings, and Starbucks. The Motley Fool has a disclosure policy.