Constellation Brands, RPM and Lamb Weston report Tuesday, PepsiCo on Thursday and Delta Air Lines on Friday. Each will show how far companies can pass rising costs on to customers.
Business · FinancialMarkets.com · · Tickers: STZ, RPM, LW, PENG, APOG, LEVI, PEP, DAL
The first full week of October's earnings calendar lands on a question Monday's economic data made sharper: who is absorbing the higher costs.
The Institute for Supply Management reported that its services prices index rose to 74.0 in September, the highest since July 2022, with 17 industries reporting higher prices and none reporting lower. Diesel futures held firm even as crude fell. The 10-year Treasury yield reached its highest level since 2002. Each of this week's reporters will speak to at least one of those pressures.
Tuesday
Constellation Brands is expected to report earnings of $3.55 a share on revenue of about $2.54 billion. RPM International is expected to earn $1.95 a share on revenue of about $2.22 billion. Lamb Weston is expected to report about 59 cents a share on revenue near $1.65 billion.
Two smaller industrial and technology names also report. Penguin Solutions is expected to earn about 77 cents a share on revenue near $520 million, and Apogee Enterprises 63 cents on about $360 million. Worthington Steel reports the same day.
Wednesday through Friday
Levi Strauss and Applied Digital follow on Wednesday, PepsiCo on Thursday and Delta Air Lines on Friday. Between them, a snack and beverage maker and an airline cover both ends of the cost question: grocery-aisle pricing and jet fuel.
What the numbers will test
The common thread is pricing power. A services sector in which nearly every industry is paying more for inputs puts pressure on margins unless companies can raise their own prices. For consumer companies, the question is whether shoppers accept those increases. For airlines, it is whether fares can keep up with fuel. For industrial suppliers, it is whether customers keep ordering at higher prices while business activity, by ISM's measure, cooled sharply in September.
Guidance will matter more than the quarters already completed. Companies that hold or raise full-year outlooks while citing cost pressure would suggest the economy can absorb it. Cuts that point to softer volumes would line up with the weaker parts of Monday's survey, including a drop in business activity and a slide in export orders into contraction.
The macro calendar alongside
The reports share the week with Fed minutes on Wednesday, $119 billion of Treasury auctions from Tuesday through Thursday and the University of Michigan's consumer survey on Friday. Higher borrowing costs feed into interest expense and into the rate investors use to value future earnings, so the bond market's reaction to the auctions may shape how stocks respond to results.
What to watch
Margins and pricing commentary from Constellation Brands and PepsiCo, fuel costs and fare trends from Delta, and order trends from RPM will give the earliest read on whether the price pressure in Monday's survey is reaching corporate profits.