Stocks barely budged last week, with both the Dow Jones Industrial Average (DJINDICES:^DJI) and the S&P 500 (SNPINDEX:^GSPC) holding flat for year's last trading days. That steady finish capped an unusually strong year for stocks, though, as the S&P 500 gained 29% in 2019.
Earnings reports are likely to drive volatility in a few stocks over the next few days. Here, we'll look at the metrics that could send Constellation Brands (NYSE:STZ), Bed Bath & Beyond (NASDAQ:BBBY), and PriceSmart (NASDAQ:PSMT) shares moving in the week ahead.
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Constellation Brands' pot plan
Alcoholic beverage giant Constellation Brands will post its results on Wednesday, and investors have a few good reasons to follow this announcement closely. The owner of hit imported beer brands such as Corona and Modelo has seen its stock fall out of favor recently, because of weakness in its wine and spirits segment, plus struggles with management's investment in marijuana stock Canopy Growth. These issues generated sluggish sales growth and a $500 million non-cash loss last quarter, respectively.
This week, investors will be looking for continued robust market share gains in the beer portfolio, plus a rebound in Constellation's core wine and spirits segment that includes the Svedka vodka and Meiomi wine brands. This niche declined 4% last quarter but should return to overall growth soon. Meanwhile, look for executives to spend some time talking about how they see their Canopy Growth purchase going now that David Klein, Constellation's former CFO, has taken over the CEO position at the Canadian company.
Bed Bath & Beyond's profit margin
Bed Bath & Beyond's fiscal year has mostly gone from bad to worse in 2019, as customer traffic trends have slumped. Market share losses are mounting both in stores and online, and these challenges contributed to a 7% revenue drop in the previous quarter. Bed Bath & Beyond also took a significant inventory writedown charge in the period that pressured earnings results.
The good news is that this charge left the chain in a lean position heading into the key holiday shopping period. We'll find out this week whether that advantage translated into healthy profit margins in a competitive time for the industry. Just as importantly, investors are keen to learn which direction new CEO Mark Tritton will be taking the company, especially after seeing him clear out most of the ranks of the company's senior management team in recent weeks.
PriceSmart's rebound strategy
Its U.S.-based counterpart, Costco, is enjoying near-record sales growth trends, but PriceSmart isn't enjoying the same lift these days. The international warehouse club's comparable-store sales were negative in the last complete fiscal year, in fact. Yet a growth uptick last quarter has investors feeling more confident that a rebound could be in the cards for the fiscal year ahead.
On Wednesday, the chain will report its latest sales metrics that will show whether economic improvements in parts of the Caribbean will outweigh the pressure from PriceSmart's denser store footprint. Management back in October also warned that sales might be affected by more competition in the U.S. Virgin Islands.
Looking further out, there are big questions surrounding CEO Sherry Bahrambeygui's back-to-basics turnaround plan. That initiative will ideally stabilize sales growth, but it can't do much to protect shareholders from the volatility inherent in PriceSmart's leverage to risky economies such as those in Trinidad and Tobago and Colombia.
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January 06, 2020 at 12:24PM
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