Stocks rose last week, continuing their late-year rally despite the Federal Reserve's decision to boost interest rates for just the second time since the Great Recession. The Dow Jones Industrial Average (DJINDICES:^DJI) is up nearly 14% for the year and the broader S&P 500 (SNPINDEX:^GSPC) has risen by double digits, too.
The week ahead will bring a highly anticipated quarterly report from Dow giant Nike (NYSE:NKE), along with earnings updates from FedEx (NYSE:FDX) and CarMax (NYSE:KMX) that could spark big stock price moves.
Nike's profit margin
With just a handful of trading days left, Nike is the Dow's worst-performing stock in 2016 -- sporting a double-digit decline compared to a 13% surge in the index. The apparel and footwear giant last posted solid quarterly results, revealing in September that sales rose 8% while earnings per share jumped a healthy 9%.
Nike's profitability took another hit, though, falling to below 46% of sales due to continued efforts to clear out excess inventory in the U.S. market. The company's futures orders, meanwhile, decelerated to a meager 5% pace from 8% in the prior quarter.
CEO Mark Parker and his executive team told investors that futures orders aren't especially predictive of the next quarter's revenue. Management also predicted a stronger second half to the fiscal year as profitability firms up and as costly investments in marketing begin to pay dividends. If Nike's updated forecast reflects that optimism this week, the stock could claw back some of its hefty 2016 losses.
FedEx's holiday forecast
Package delivery specialist FedEx has produced market-thumping gains for investors this year, with its 33% spike beating both the broader market and its chief rival, UPS. Sales figures are soaring thanks to the company's acquisition of European operator TNT Express. But its core business is also enjoying improving trends.
The domestic express shipment segment is seeing improved base yields, higher package volumes, and falling expenses. These factors combined to generate double-digit earnings growth for the division, which helped push operating margin up to 9% of sales from 8%.
Investors will be looking for more progress on the profitability front this week as FedEx brings the TNT Express business up toward the wider enterprise's operating margin. Comments about holiday season shipping will be closely watched, too, as record demand should give the company room to raise shipping rates in the new year.
CarMax's customer traffic
Investors aren't expecting much good news out of CarMax this week. After all, the automotive retailer has suffered through four straight quarters of falling customer traffic, which is pressuring results on both the top and bottom lines. At its last quarterly showing, earnings slipped 6%.
However, there are encouraging signs of a potential turnaround in the cards. Comparable-store sales returned to growth last quarter despite the weaker traffic trends as the company converted a higher percentage of those browsers into buyers. That improved efficiency could supercharge sales growth if customer traffic growth returns to positive territory. Meanwhile, gross profit margin is holding steady thanks to disciplined pricing, which implies healthy overall demand.
CarMax aims to open 16 showroom locations over the next year, with six of them representing entirely new markets for the retailer. That expansion pace highlights the long runway for growth that's ahead for the company -- assuming its no-haggle, high-volume sales approach continues to resonate with car shoppers.
Demitrios Kalogeropoulos owns shares of Nike. The Motley Fool owns shares of and recommends CarMax, FedEx, and Nike. The Motley Fool recommends United Parcel Service. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.