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PepsiCo, Constellation Brands, Costco earnings — What to know in markets Thursday

Heidi Chung

Markets have been off to a rocky start to kick off October and the fourth quarter. Three key earning reports — beverage giant PepsiCo (PEP), beer brand Constellation Brands (STZ) and big-box retailer Costco (COST) — could help boost stocks Thursday.

Ahead of the opening bell, PepsiCo and Constellation Brands take the spotlight.

Analysts are predicting that PepsiCo’s Frito-Lay North America business strength continued in the third quarter. Snacks have been the bright spot for the beverage giant over recent quarters. Though the beverage business has been underperforming snacks, analysts expect the North American beverages segment to show a bit of improvement. Investors will be paying close attention to full-year earnings and revenue guidance.

PepsiCo is expected to report adjusted earnings of $1.50 per share on $16.93 billion in sales, according to analysts polled by Bloomberg. Organic sales are projected to have grown 3.4% during the quarter. Frito-Lay North America is expected to have risen 5%, while 1.75% growth is anticipated for Beverages North America.

Corona beer bottles seen on the store shelf (Photo by Igor Golovniov/SOPA Images/LightRocket via Getty Images)

Constellation Brands will release fiscal second-quarter results and is expected to report adjusted earnings of $2.63 per share on $2.34 billion of revenue. Last month, the company said its Q2 results would include a $38.5 million net loss from its investment in Canopy Growth (CGC). Nevertheless, Constellations beer sales will be the focal point for investors and analysts.

Second quarter beer net sales are estimated to have totaled $1.64 billion and shipment volume is expected to have reached 92.97 million cases, up from 82.1 million cases in the first quarter. The options market is implying a nearly 6% move in either direction following Constellations earnings report.

Meanwhile, after the closing bell, retail giant Costco will release its fiscal fourth quarter financial results. Costco’s strong same-store sales momentum is expected to have continued in Q4. Excluding fuel and the impact of foreign exchange, same-store sales in the U.S. are expected to have risen 5.4% and 5.7% in Canada and international markets, respectively, according to Bloomberg-compiled estimates. Furthermore, strong loyalty among customers likely boosted membership revenue by 5.3% during the quarter. The retailer is expected to report adjusted earnings of $2.54 per share on $47.70 billion in revenue.

The ongoing trade war and U.S. tariffs on Chinese goods continues to be a concern for retailers. Investors will be paying attention to any additional commentary regarding the tariffs. Costco has been crushing its competitors. Shares have skyrocketed a whopping 40% this year, while Walmart (WMT) jumped 26%, and BJ’s Wholesale Club (BJ) rose 12% in the same time period.

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Heidi Chung is a reporter at Yahoo Finance. Follow her on Twitter: @heidi_chung.

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