Investors have kept The Hershey Company (NYSE:HSY) stock returns below the broader market's for most of 2020. That performance reflects pessimism about the confectioner's business, which has seen weakening sales trends in each of the last two quarters.

The company has a chance to change that narrative when it announces its third-quarter results on Friday, Nov. 6. Below, we'll take a look at a few of the trends that should matter most to investors following that report.

Getting back to growth

The COVID-19 pandemic has had a mixed impact on Hershey's business by lifting demand for some products (like its baking supplies) and dampening it in other areas (such as gums and mints). Overall, the growth picture has been weak, with organic sales falling in each of the first two quarters of 2020.

A young woman eating chocolate.

Image source: Getty Images.

CEO Michele Buck and her team didn't issue an outlook for the third quarter, but they did say they expected sales to return to positive territory in the second half of the year. Wall Street pros apparently agree with that modest forecast and are predicting sales will inch higher by less than 1% this quarter, to $2.14 billion.

What's more important than that headline figure is whether the broader organic sales growth trend -- especially sales volume -- shows a turnaround in the global business. Investors are also hoping to see evidence of continued market share gains in the core candy niche as a result of Halloween celebrations.

Snacks and such

Hershey has been busy cutting costs and raising prices in recent months, and shareholders should see those initiatives reflected in higher profitability on Friday. Adjusted gross margin was flat last quarter at roughly 46% of sales and adjusted operating margin rose to 22.6% from 20.9% a year earlier. Look for increased marketing and advertising spending to offset gains in places like pricing, but with bottom-line profitability still improving year over year.

Those financial wins will help Hershey direct cash toward its growth initiatives, including supporting newly acquired snack food brands like Pirate Brands and Amplify. They are also critical to keeping Hershey in a flexible position during this unusually volatile time for consumer demand and economic growth.

The confectioner also needs improving margins to support plans to aggressively return cash to shareholders through dividends and stock repurchases. "We remain confident that our healthy balance sheet and strong cash flow will enable us to meet current business needs, invest for the future and return cash to stockholders," executives said in late July.

A new outlook?

It's possible that demand shifts have settled down enough that management can reinstate its outlook this week. We're already a few weeks into the year's final quarter, after all.

That forecast had initially called for organic sales gains to slow to between 1% and 3% in 2020 compared to last year's 2% uptick. About half of that growth was set to come from the core consumer business, and half from recently purchased brands. Hershey withdrew that outlook when COVID-19 began disrupting economies around the world but might offer a new forecast this week.

Even if it does, though, investors will be more interested in learning whether Hershey can quickly bounce back from the pandemic demand challenges that harmed sales and profits this year. We likely won't have much data on that point until the company closes its fiscal year out in late January and issues its official forecast for 2021.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis -- even one of our own -- helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.