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3 Things to Watch in the Stock Market This Week

By Demitri Kalogeropoulos - Oct 20, 2019 at 2:30PM

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McDonald's is one of several stocks set to make big moves over the next few trading days.

Major benchmarks edged higher last week to mark a second-straight increase for both the S&P 500 (^GSPC 0.02%) and the Dow Jones Industrial Average (^DJI 0.11%). The two indexes are up by more than 15% so far in 2019 as third-quarter earnings season enters its highest-volume period. 

In fact, hundreds of companies will post results over the next few days, and below we'll take a look at the metrics that could send shares of McDonald's (MCD -0.81%), eBay (EBAY -0.27%) and iRobot (IRBT 0.27%) moving in the week ahead.

McDonald's customer traffic

McDonald's business has been improving lately, with global growth accelerating in the fiscal second quarter while profitability edged closer to a market-thumping 45% of sales. But there has been a key piece missing from the fast-food giant's rebound. Despite management's best attempts over the past year, McDonald's customer traffic levels are still declining in the core U.S. market even as they tick higher internationally.

A man about to bite into a burger.

Image source: Getty Images.

CEO Steve Easterbrook and his team said back in July that the traffic metric is a top priority, and the restaurant chain has no shortage of resources that it can devote toward the goal. These include an aggressive store remodeling plan and a push into home delivery. But it's not clear whether that will be enough to keep McDonald's ahead in what's shaping up to be a huge fight for fast-food market share. Tuesday's earnings report might answer that question for investors.

eBay's recovery plans

eBay shares have trounced the market so far this year, with gains reflecting rising optimism that the e-commerce giant's business is about to turn the corner. Its last earnings report had encouraging hints of those stable growth trends and was highlighted by management's second consecutive guidance increase as sales growth held at 4%.

A lot has changed since eBay posted second-quarter earnings in July, though, including the appointment of a new interim CEO taking the reins from Devin Wenig. That management shakeup makes Tuesday's earnings report even more of a draw for investors, who are eager to find out whether the marketplace is close to striking a sale of noncore businesses like StubHub as part of its restructuring effort. Wall Street will also be keen to learn about sales volumes trends in the U.S. market, which has been shrinking over the past six months.

iRobot's holiday shipments

iRobot stock has taken a dramatic turn lower in the months leading up to its earnings report on Tuesday. The robotic cleaning device specialist's shares had been higher by over 50% early in 2019 but are now down by more than 30% so far on the year.

That shift was solidified in late July when CEO Colin Angle and his team reduced their 2019 forecast while warning of a significant slowdown in the broader industry. That much is clear from the Roomba maker's sales volumes, with unit gains up just 10% over the past six months compared to a 23% increase at the same point in 2018.

iRobot believes much of the slowdown can be pinned on surging Chinese import tariffs and the disruption that's causing around pricing and retailer shipment timing. The good news is that these issues should eventually settle themselves out. However, iRobot may still be entering the critical holiday shopping period with unusually weak momentum. That's why investors are hoping that the company can show signs that retailers have finally stocked up their shelves with Roomba products after having delayed orders in recent months to try to avoid tariff charges.

Demitrios Kalogeropoulos owns shares of McDonald's. The Motley Fool owns shares of and recommends iRobot. The Motley Fool has the following options: short October 2019 $37 calls on eBay and long January 2021 $18 calls on eBay. The Motley Fool recommends eBay. The Motley Fool has a disclosure policy.

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Stocks Mentioned

iRobot Stock Quote
iRobot
IRBT
$59.76 (0.27%) $0.16
Dow Jones Industrial Average (Price Return) Stock Quote
Dow Jones Industrial Average (Price Return)
^DJI
$33,347.19 (0.11%) $37.68
S&P 500 Index - Price Return (USD) Stock Quote
S&P 500 Index - Price Return (USD)
^GSPC
$4,211.27 (0.02%) $1.03
McDonald's Corporation Stock Quote
McDonald's Corporation
MCD
$259.24 (-0.81%) $-2.12
eBay Inc. Stock Quote
eBay Inc.
EBAY
$48.37 (-0.27%) $0.13

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

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