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3 Things to Watch in the Stock Market This Week

Demitrios Kalogeropoulos, The Motley Fool

Stocks rose significantly during a shortened trading week last week as both the S&P 500 (SNPINDEX: ^GSPC) and the Dow Jones Industrial Average (DJINDICES: ^DJI) held close to record highs. The indexes are each up by over 15% so far in 2019.

The week ahead brings several highly anticipated earnings reports. Below, we'll take a closer look at the biggest. Read on for a preview of what investors can expect to hear from PepsiCo (NASDAQ: PEP)Levi Strauss (NYSE: LEVI), and Bed Bath & Beyond (NASDAQ: BBBY) over the next few trading days.

Pepsi's beverage business

Investors are looking forward to PepsiCo's second-quarter report, due out before the market opens on Tuesday. The snack and beverage titan's last announcement contained plenty of good news about the business, including its fastest growth rate in over three years. Pepsi's expansion pace has now been steadily accelerating for the better part of a year.

Two women drinking soda.

Image source: Getty Images.

The company still faces big challenges as it works to adjust to changing consumer tastes around carbonated beverages and snack foods. The drink segment is looking to improve on its weak 2% growth rate, and Pepsi's packaged-food division is also struggling with soft demand.

These issues help explain why new CEO Ramon Laguarta and his team left their 2019 outlook unchanged last quarter to project a steady sales growth pace of 4%. That's slightly better than the slowdown that rival Coca-Cola has been predicting, but investors are still hoping to see at least a modest boost to that full-year forecast on Tuesday.

Levi Strauss' outlook

Wall Street is still trying to figure out the prospects for solid long-term returns from Levi Strauss' business, so the apparel-giant's report on Tuesday afternoon is likely to attract plenty of attention. It's only the company's second quarterly announcement since going public in March, after all.

Levi's debut report was strong, with sales rising 11% after adjusting for currency exchange-rate moves. Adjusted earnings improved at a more robust 14% thanks to restrained expense spending.

CEO Chip Bergh and his team issued a modest 2019 outlook that calls for sales and profit growth to slow to the mid-single-digit range. On Tuesday, we'll find out whether executives have any updates to that prediction to account for recent demand shifts or the mounting disruptions tied to world trade disputes.

Bed Bath & Beyond's rebound strategy

This year has been a roller-coaster ride for Bed Bath & Beyond shareholders, with the stock rising by almost 70% at one point before collapsing to a near flat result in recent weeks. Investors were optimistic that an activist investor action might spur big strategic changes or even an outright sale of the specialty retailer. Yet that enthusiasm has waned as the company's search for a new CEO stretches on.

Interim leader Mary Winston will oversee the chain's first-quarter report on Wednesday, and investors aren't expecting her to reveal much good news. Sales are projected to fall 6%, to $2.58 billion, as the company lessens its reliance on promotions. Investors who follow the stock are looking for earnings to dive to $0.08 per share from $0.32 per share a year ago.

Beyond that, the new permanent CEO will face major challenges, beginning with ending Bed Bath & Beyond's market-share slide without resorting to margin-busting price cuts. That strategy will likely involve at least some store closures, and the chain might have more to say about its right-sizing initiative this week.

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Demitrios Kalogeropoulos has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.