Earnings reports next week from restaurant companies, global logistics company FedEx (NYSE:), consumer foods company General Mills (NYSE:), and home builder Lennar (NYSE:) provide important insights into consumer sentiment and the direction of the economy, domestic and global.
Lennar sheds light on consumer confidence, which is an important barometer of economic growth, but also provides insight on downstream industries such as furniture makers, home electronics and appliances.
The sentiment in Lennar (LEN) stock does not appear upbeat. Over the last 30 days, eight analysts have lowered their earnings per share estimates, and there are only 10 analysts covering the company. That’s a strong level of sentiment that earnings are likely to be off.
The most telling figure Lennar will report is new orders. Its guidance calls for between 22,500 homes and 23,500 homes. A tight margin, suggesting some degree of confidence on the part of Lennar management. A miss on new orders will not be well received by the Street for Lennar stock, and for sentiment surrounding economic growth. When consumers are not feeling very confident, they stop buying homes.
When FedEx (FDX) reports on Thursday, it will offer insights on the domestic as well as the global economy. Shipments of packages and industrial equipment reflect on manufacturing, wholesale and consumer activity. If fewer goods are being shipped, that’s a telling sign that there’s slack in the economy. Of course, one quarter does not make a trend, but Thursday’s report will offer more evidence of either growth or deceleration in the economy.
As a stock, FedEx has been a disappointment to investors who have held it over the last five years. Year to date, one-year and five-year returns are losses of 18.3%, 19.3% and 1.3% respectively. That said, since the company went public in 1985, shares are up more than 24,000%.
Still, sentiment appears negative in FedEx at the moment, however. The consensus among the 19 analysts who have published estimates for first-quarter sales is that they will be essentially flat with growth of less than 1%. This is more or less in line with FedEx’s guidance, which calls for a flat to 2% revenue growth rate year over year. Still, 6 of the 19 analysts with first-quarter estimates have lowered them; four within the last 30 days, and two more within the last seven days.
One reason analysts’ sales estimates may be more accurate for FedEx than other companies in other industries is that information on e-commerce sales, inventory levels and manufacturing activity offers valuable clues about shipping volumes for FedEx.
General Mills (GIS) reports on September 17 and is a litmus test for consumer spending and the impact of tariffs on the margins of manufacturers. The company already affirmed that earnings per share for fiscal 2026 are going to be off 10% to 15%. Shares are off more than 20% so far this year on declining sales and earnings. The feeling of uncertainty for GIS is poised to persist. What would be truly negative from an economic point of view would be if General Mills missed its own lowered forecast.
Three restaurant companies are reporting next week: Darden Restaurants (NYSE:), which operates Olive Garden and LongHorn Steakhouse, among others, Dave & Buster’s Entertainment (NASDAQ:) and Cracker Barrel (NASDAQ:) (CBRL). When consumers are feeling pinched, one of the first victims is spending at restaurants.
The earnings report for DRI will provide some clarity on a decidedly mixed outlook. For instance, within the last 30 days, four analysts have revised their earnings per share estimates upward, and five downward. Overall, 31 analysts cover the company, and clearly, there’s a divergence of opinion about what the next quarter will bring.
The same divergence of opinion exists with Dave & Buster’s, but there are just eight analysts who cover the company.
As far as Cracker Barrel goes, the dust-up the company has suffered for its logo change may be a blessing in disguise. With so much focus elsewhere, investors may not pay much attention to their actual earnings. Still, four of the eight analysts who cover the company revised their earnings estimates upward over the past month.