Please ensure Javascript is enabled for purposes of website accessibility

What to Watch in the Stock Market This Week

By Demitri Kalogeropoulos - Apr 4, 2016 at 8:27AM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

On tap for investors over the next few trading days: An important update from the Federal Reserve, and three key earnings announcements.

Stocks continued their rally last week as the Dow Jones Industrial Average (^DJI 2.68%) and the S&P 500 (^GSPC 3.06%) each rose by nearly 2%. For investors keeping count, that's six straight weeks of gains following double-digit year-to-date losses in mid-February.

^INX Chart

^INX data by YCharts.

For the week ahead, investors can expect volatility around the Federal Reserve's data release set for 2 p.m. EST on Wednesday, when the central bank publishes minutes from its March monetary policy meeting. That meeting produced a forecast of two quarter-point interest rate hikes in 2016, and investors will be scrutinizing the minutes for clues to the Fed's thinking on supporting economic growth while keeping inflation in check.

Major earnings reports are also due out for Darden Restaurants (DRI 3.64%), Constellation Brands (STZ 2.57%), and CarMax (KMX 7.19%).

Tuesday, April 5 -- Darden Restaurants' customer traffic
Darden Restaurants, owner of national sit-down chains such as Olive Garden and LongHorn Steakhouse, will post its fiscal-third-quarter results before the opening bell on Tuesday. The company in early March pre-announced a few operational highlights, including achieving 6% comparable-store sales growth (marking an acceleration from the prior quarter's 2% uptick), and adjusted earnings of about $1.19 per share (20% above last year's result).

Source: Darden Restaurants.

In Tuesday's release, investors will be interested in Darden's customer traffic figures. Those trended lower at both Olive Garden and LongHorn in November, and while increased menu prices made up for the drop, the company needs to continuously fill its booths if it hopes to keep its turnaround momentum going strong.

Wednesday, April 6 -- Constellation Brands' beer sales
Constellation Brands posts quarterly results on Wednesday morning that will close out what's expected to be a banner fiscal year for the alcoholic-beverage giant. Last quarter, sales jumped 6% higher as operating income soared 15%, to reach $476 million, as the beer business took off. In fact, beer shipments, led by Corona and Model brands, are up 12% during the last nine months, trouncing Constellation's 6% uptick in wine and spirit volumes.

Source: Constellation Brands.

In January, CEO Rob Sands and his executive team forecast 23% profit growth for fiscal 2016 that will be powered by double-digit gains in the beer business. The long-term outlook for that segment is improving, as well, thanks to two new breweries that will start contributing to results soon.

Executives project that Constellation Brands will post $5.10 per share of earnings for fiscal 2016 on Wednesday, up from $4.17 per share in the prior-year period.

Thursday, April 7 -- CarMax's used-car volume
On Thursday, auto retailer CarMax hopes to bounce back from weakening operating results that have helped push shares 25% lower during the last year. Three months ago, the company posted what CEO Tom Folliard admitted was a "challenging sales quarter" in which comparable-store sales fell 1% on declining traffic at its dealerships. Gross profit per used vehicle was flat, at $2,200. That result, plus increased advertising costs, produced a 1.3% decline in net income, to $128 million.

Consensus estimates call for a similarly sluggish result for the fourth quarter. Revenue should rise by 4.7% for a minor improvement over the prior quarter's 4% uptick. Earnings per share will grow 6%, Wall Street believes, but mainly because of stock repurchases.

CarMax investors can expect a CEO transition sometime this year, as Folliard has announced he will retire before the end of 2016 to be replaced by fellow executive Bill Nash. Folliard called the incoming leader "the right choice to guide CarMax through the next phase of our growth and development," which includes expanding into new markets including Seattle, San Francisco, and New York City in the coming years.

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

Dow Jones Industrial Average (Price Return) Stock Quote
Dow Jones Industrial Average (Price Return)
^DJI
$31,500.68 (2.68%) $823.32
S&P 500 Index - Price Return (USD) Stock Quote
S&P 500 Index - Price Return (USD)
^GSPC
$3,911.74 (3.06%) $116.01
Constellation Brands, Inc. Stock Quote
Constellation Brands, Inc.
STZ
$245.50 (2.57%) $6.15
Darden Restaurants, Inc. Stock Quote
Darden Restaurants, Inc.
DRI
$119.81 (3.64%) $4.21
CarMax Inc. Stock Quote
CarMax Inc.
KMX
$98.36 (7.19%) $6.60

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

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning analyst team.

Stock Advisor Returns
336%
 
S&P 500 Returns
115%

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 06/26/2022.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.