Stocks ended flat by the end of a volatile trading week last week. The Dow Jones Industrial Average (^DJI 1.61%) and the S&P 500 (^GSPC 0.56%) are still both down 4% so far in 2022 after having dropped by more than 10% through early March.
Economic and geopolitical headlines might continue driving market swings in the week ahead, but a few companies will see extra volatility thanks to earnings reports. Let's look at what investors might expect to hear from Constellation Brands (STZ 2.49%), Levi Strauss (LEVI 2.35%), and Simply Good Foods (SMPL +0.00%) over the next few trading days.
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1. Constellation Brands' price increases
Investors have some big questions heading into Constellation Brands' Thursday announcement. The alcoholic-beverage giant, which owns imported brands such as Corona, probably faced demand challenges in the hard-seltzer niche through late 2021, even as its core beer products grew. Wall Street is concerned about rising costs, too.
Look for CEO Bill Newlands and his team to highlight how Constellation's deep portfolio allowed it to expand more steadily than peers such as Boston Beer. Follow gross profit margin for signs that the company is struggling to pass along rising costs through price increases.
The stock might move most directly in response to changes in management's 2022 outlook, which currently forecasts a roughly 10% sales increase in the beer segment as the wine and spirits division takes another step toward steady growth and higher profitability.
2. Levi Strauss' new outlook
Shareholders are bracing for some potentially bad news in Levi Strauss' fiscal Q1 earnings report on Wednesday. The denim apparel specialist reported solid sales growth at its last quarterly announcement, covering the period through late November. This holiday report could be marred by weakening operating metrics, though.
Levi's had to contend with a contracting Chinese market, for example, and supply chain challenges that pressured growth in the U.S. and Europe. These challenges might show up in slower sales gains than the 7% two-year increase the company reported back in late January. Operating income might slip from the lofty 12% rate, too.
The big question is whether Levi's still expects to grow sales by between 11% and 13% in 2022. Any shift in that outlook will spark a corresponding move in its stock price this week.
3. Simply Good Foods' margins
Simply Good Foods' stock has been trailing the market so far in 2022, but shareholders are hoping that this week's report will change that trend. The owner of health food franchises, including Atkins and Quest, entered the period with mixed momentum. Sales and market share trends were positive through late November, but profitability is declining, thanks to general inflation and soaring expenses in areas like labor and transportation.
Management said back in January that these trends will slightly reduce adjusted profit margin in 2022, but this week's report might include a downgrade to that forecast, given that inflation trends worsened in recent weeks.
A short-term earnings slump is no reason to abandon Simply Good Foods' stock, especially if the company continues gaining market share in the nutritious snacking niche. But it does imply a volatile tie ahead for owners of the packaged-food stock.
