3 Things to Watch in the Stock Market This Week

Stocks declined last week as volatility continued to affect investors. Both the Dow Jones Industrial Average (DJINDICES: ^DJI) and the S&P 500 (SNPINDEX: ^GSPC) shed nearly 2% and are down over 5% for the full year.

Earnings season continues in the week ahead, and below we’ll look at a few highlights of many announcements on the way. Ulta Beauty (NASDAQ: ULTA), Casey’s General Stores (NASDAQ: CASY), and Campbell Soup (NYSE: CPB) are among the most anticipated earnings reports to watch over the next few trading days.

Let’s take a look.

1. Ulta Beauty’s expansion plan

Investors are looking forward to the earnings update from Ulta Beauty that’s scheduled for Thursday afternoon. The beauty products retailer’s last report was a blockbuster, with sales gains accelerating to 29% and earnings shooting higher thanks to rising profitability.

On the sales front, we’ll find out this week whether Ulta is still seeing rebounding demand for makeup and skin care products. Watch the balance between customer traffic and rising spending for evidence of strong growth. Ulta’s store traffic jumped 17% last quarter even as average spending per visit rose 8%. Ideally, both metrics will be higher again for the holiday quarter.

The chain will also reveal whether its operating margin slipped due to supply chain challenges, or if it is still heading toward all-time highs above 14% of sales. If that figure continues to rise in the context of robust customer traffic, then management might announce a more aggressive store opening plan for 2022.

2. Casey’s General Stores’ new outlook

Casey’s General Stores will announce its latest earnings results on Tuesday afternoon, and expectations are modest heading into the convenience store retailer’s report.

A masked woman examines a bottle at a convenience store.

Image source: Getty Images.

Sure, Casey’s is likely to see strong growth compared to last year. Most of those gains will come from its purchase of the Pilot convenience store brand, though. Watch for any change in Casey’s same-store sales, which were up 6% last quarter.

CEO Darren Rebelez said in early December that this increase was powered by rising customer traffic and high demand for prepared foods. We’ll learn on Tuesday whether those positive trends continued into early 2022.

Casey’s report will answer key questions around cost spikes and inventory challenges, too, which began to affect the business in late 2021. Look for a potential update to management’s outlook, which currently forecasts growth in the mid-single-digit percentage range.

3. Campbell Soup’s 2022 forecast

Campbell Soup has some big questions to answer for investors on Wednesday morning. The packaged food products specialist saw solid sales gains during the earlier phases of the pandemic, but growth has slowed in recent quarters. In fact, management sees its long-term expansion potential at just around 2% per year, according to a mid-December update.

Campbell Soup is planning to boost earnings at a faster rate than that, and its generous dividend should also lift investors’ returns.

However, most investors will be looking for signs that the company can, through innovation and acquisitions, accelerate its growth over time. Otherwise, it falls on cost cuts alone to improve Campbell Soup’s profitability and earnings power in 2022 and beyond.

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Demitri Kalogeropoulos has no position in any of the stocks mentioned. The Motley Fool owns and recommends Ulta Beauty. The Motley Fool recommends Caseys General Stores. The Motley Fool has a disclosure policy.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


Jinggo B Danuarta

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