The stock rose in a shorter trading week last week. Both the Dow Jones Industrial Average (DJINDICES: ^ DJI) and the S&P 500 (SNPINDEX: ^ GSPC) gained more than 1% and peaked at the beginning of the second quarter of 2021.
Several popular companies will announce earnings results in the next few days. That list includes Constellation Marks (NYSE: STZ), Levi Strauss (NYSE: LEVI), and Simply Good Foods (NASDAQ: SMPL), whose reports we will be viewing.
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1. Perspective of the Constellation brands
Constellation Brands will end its fiscal year with a fourth-quarter earnings report on Thursday, and investors expect to hear good news from the liquor giant. Its latest quarterly update showed surprisingly strong growth in sales, as robust consumption of beer at home offset the drop in demand in bars and restaurants. Along with Boston Beer, Constellation Brands was responsible for most of the sector’s growth in 2020.
This week’s report is expected to contain more evidence of strong growth in imported beer brands like Modelo and Pacifico, along with the modest success in launching the company’s Corona soft drink, which competes directly with the Boston Beer Truly franchise. Sales gains will slow compared to the last quarter because of shipments and inventory changes, but Constellation Brands’ consumption metrics are still likely to be solidly positive.
However, the stock movement may depend on the 2022 fiscal outlook that CEO Bill Newlands and his team released on Thursday. This prediction may include optimism for the beer division and the newly transformed segment of wines and spirits, along with some potentially great opportunities in the recreational space of marijuana.
2. Simply Good Foods organic sales
Simply Good Foods shares have outperformed the market’s recovery since the COVID-19 write-offs, which set a high standard for Wednesday’s second quarter earnings report. Prior to the announcement, most investors expect the health-focused food and snack specialist to post strong growth, with sales likely to be around $ 230 million.
Management’s recent acquisition of the Quest Nutrition franchise may add noise to that number, but CEO Joseph Scalzo and his team are expected to detail their organic sales estimates this week as well. Growth by this metric was around single digits, the company said in early January.
For stocks to continue to rise further in 2021, Simply Good Foods will need to show steady demand on its Atkins and Quest brands, which continues even as the pandemic threat declines. And investors expect profitability to improve thanks to the higher sales base. Expect management to issue more detailed guidance on these two numbers as part of Wednesday’s earnings report.
3. Levi Strauss forecast for 2021
Jeanswear expert Levi Strauss will announce his first quarter fiscal results on Thursday afternoon. The stock jumped last year, but many investors see an opportunity for even greater gains ahead.
This optimistic thesis depends on the company further differentiating its small but fast-growing e-commerce platform. Levi Strauss also intends to diversify into complementary categories outside its main focus on denim. Progress in these two areas may remove some of the pain in weak sales, which are expected to drop 17% this quarter compared to the 12% drop in the previous quarter.
The rise in stock prices in recent months means that investors will be looking to management to issue a positive outlook for 2021, after last year’s sales decline of 23%. Watch the executive stock update to get an idea of how demand and price trends are going after a difficult holiday season.
This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a premium Motley Fool consulting service. We are heterogeneous! Questioning an investment thesis – even our own – helps all of us to think critically about investing and making decisions that help us become smarter, happier and wealthier.