3 Things to Watch in the Stock Market This Week

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Stocks pushed higher last week, with both the Dow Jones Industrial Average (DJINDICES: ^DJI) and the S&P 500 (SNPINDEX: ^GSPC) touching new highs. The two indexes are up over 12% so far in 2017 as we enter the final quarter of the year.

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A few stocks are set to make big moves over the next week as investors react to their up-to-date earnings results. Here's what to look for in upcoming reports by Costco (NASDAQ: COST), Constellation Brands (NYSE: STZ), and Pepsi (NYSE: PEP).  

Pepsi's beverage volume

Soda and snack titan Pepsi will announce its quarterly results before the market opens on Wednesday, Oct. 4. Wall Street is expecting just a tiny 2% uptick in sales, to $16.32 billion, while profits rise to $1.43 per share from $1.40 per share a year ago.

Pepsi's last quarterly report kept the company right on pace with its modest growth goals for the year. Organic revenue is up 3% over the last six months and earnings, after adjusting for currency swings, are higher by double digits.

CEO Indra Nooyi and her executive team are hoping to offset weakness in the soda and snack industries through a mix of cost cuts and portfolio tweaks that bring its products more into line with shifting consumer tastes. For example, Pepsi is reducing out-of-favor ingredients like sugar in its core products and using acquisitions like its 2016 KeVita purchase to boost growth. Look for Nooyi to discuss the positive effects those initiatives are having on sales volumes this week. 

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Constellation Brands' profit margin

Constellation Brands stock is trouncing the market this year, mainly thanks to an imported beer portfolio that's delivering strong sales gains and rising profitability. The company paid nearly $5 billion in 2013 for the U.S. rights to a group of beer brands anchored by the Corona and Modelo franchises. It turns out that the acquisition couldn't have happened at a better time for the business. The craft beer segment is suffering from a glut of supply, and consumers are moving away from value-based light beers. As a result of those changes, Constellation Brands has found itself ideally positioned with its range of premium imports -- and the proof is in the numbers. Depletions (a measure of sales volume) spiked 12% last quarter even as increased prices pushed earnings up 22%. 

Constellation Brands aims to keep that positive momentum going by widening its distribution into more sales points including convenience stores. Investors will also get an update on that initiative, along with news on progress toward the company's long-term plan of achieving over 30% operating margin and at least $1 billion of annual free cash flow by fiscal 2019.

Costco's renewal rate

Costco, the country's second biggest retailer, posts its quarterly numbers after the market closes on Thursday, Oct. 5. The warehouse giant is enjoying strong growth lately that has made it a rare bright spot in an industry that's being hurt by consumer shifts toward online shopping. Costco last reported 5% higher quarterly sales as its membership fee revenue improved to $644 million from $618 million. 

Costco's subscription prices are rising, but that won't begin to boost profits until the upcoming fiscal year. In the meantime, investors will be looking for evidence that the retailer remains well protected against e-commerce specialists. The best metrics to judge the strength of that moat will be comparable-store sales gains and membership renewal rates. If both numbers continue trending higher, as they have so far this fiscal year, Costco's stock is likely to keep its premium pricing despite softness in the retailing industry. 

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Demitrios Kalogeropoulos owns shares of Costco Wholesale. The Motley Fool recommends Costco Wholesale and PepsiCo. The Motley Fool has a disclosure policy.