Stocks rallied on Friday, but not by enough to avoid a fourth consecutive weekly loss for the broader market. In the end, the Dow Jones Industrial Average (DJINDICES:^DJI) shed nearly 2% and the S&P 500 (SNPINDEX:^GSPC) lost 0.7% for the week.
Several widely owned stocks will announce earnings results over the next few trading days, including McCormick (NYSE:MKC), PepsiCo (NASDAQ:PEP), and Bed Bath & Beyond (NASDAQ:BBBY). Below, we'll look at the key trends that might send their shares moving this week.
McCormick's consumer sales
McCormick's earnings results through the first few months of the pandemic reflected wide demand swings in its two core operating segments, which cater to consumers and restaurants. Tuesday's announcement should tell a different story for the spice and flavorings giant.
Investors are expecting to see a slowdown from the double-digit sales boost that McCormick posted in late July. The restaurant segment should remain pressured, as many food service enterprises are operating at reduced capacity. But the big question is whether McCormick is seeing a sustained lift to its condiments and flavoring products as people continue to prepare more meals at home.
If the company manages even a slight acceleration to the 2% to 4% sales growth rate that management initially forecast for the year, then investors could see a boost to other key financial metrics including cash flow, earnings, and direct cash returns like dividends.
PepsiCo's snack segment
PepsiCo announces its results on Thursday, and investors have some big questions heading into that report. The good news is the company wasn't hit especially hard by pandemic changes to consumer behavior thanks to its booming snack food business. In fact, that segment offset sharp declines in the beverage niche as people avoided traditional away-from-home drinking occasions like sporting events and restaurant visits.
But it's not clear whether Pepsi can keep its winning streak going into the second half of 2020. That track record includes new customers for prepared food products from the Quaker Food segment, but shareholders are also curious to see if the consumer staples leader can continue to outpace Coca-Cola (NYSE:KO) in the market share battle in the core U.S. geography. Its organic growth metrics will help resolve that uncertainty on Thursday.
Bed Bath & Beyond's shopper traffic
Expectations are low heading into Bed Bath & Beyond's fiscal second-quarter update on Thursday. The specialty retailing chain has been struggling with weak demand as consumers consolidate shopping trips, and that slumping customer traffic has only been partly offset by its online selling channel.
On the bright side, Bed Bath & Beyond's merchandise offering covers the in-demand shopping niche of home furnishings. That focus, plus the retailer's aggressive restructuring plans, has investors hoping for a financial rebound over the next few quarters.
However, caution is warranted when considering buying this stock today. Bed Bath & Beyond is closing stores and cutting inventory heading into the holiday season. That strategy should produce better earnings results, but it's hard to see how it could spark a return to sales growth anytime soon.