After making Nike (NYSE:NKE) the single worst-performing stock in the Dow last year, investors are warming up to the global sports apparel titan again. Shares have modestly outperformed the market so far in 2017, rising by double digits compared to the Dow's 6% growth.

Whether those early gains strengthen into a solid rally -- or disappear completely -- will likely depend on what the company reveals about its business trends in the fiscal third-quarter report due out on Tuesday, March 21.

Here are a few key points for investors to watch for in that announcement.

A jogger stopping for a drink of water.

Image source: Getty Images.

Sales growth

Nike likes to bill itself as a growth company, but that branding has come under question lately as its expansion pace worsened. Revenue rose 12% in fiscal 2016 to mark a decrease from the prior year's 14% jump. Halfway through fiscal 2017, that number has dropped to just 9%.

NKE Revenue (Quarterly YoY Growth) Chart

NKE Revenue (Quarterly YoY Growth) data by YCharts.

The main drag has been the U.S. market, where sales gains were just 5% over the last six months thanks to a mix of soft demand in the industry and a flood of competitive products. The good news for Nike is that it is far less exposed to this geography than rival Under Armour (NYSE:UA) (NYSE:UAA), which derives 85% of its business from the U.S. The comparable figure is just 50% for Nike.

Still, Nike has been predicting more solid growth in the U.S. in the second half of fiscal 2017, and investors will want to see evidence of a rebound both in this week's report and in the company's updated forecast for the full fiscal year.

Profitability

In the six months ended last November, Nike's gross profit margin sank 2 percentage points to 45% of sales as the company was forced to increase promotions to clear out slow-moving inventory. Management blamed a "higher mix of off-price" products as the key reason gross profit increased by only 3% in the fiscal second quarter.

If Under Armour's more recent results are any indication, the market became even softer over the competitive holiday season. Its gross margin collapsed to 45% of sales from 48% last quarter due to what management called "aggressive efforts to manage inventory." CEO Kevin Plank told investors that the team's product portfolio wasn't fresh enough to stand out from the competition, especially at the premium end of the market. The company also dramatically lowered its sales growth outlook.

Wall Street is hoping for a better performance out of the industry leader. Just before the holiday season, Nike said shareholders should see rising profitability over the next few quarters, and this week, investors will learn whether its new product launches were popular enough to sustain that optimism.

Looking ahead

Three months ago, Nike's full-year forecast called for 2017 sales gains in the high single-digit range -- paired with slowly rebounding margins. The profit half of that prediction is easier to achieve considering the stronger inventory position it entered the holiday season with compared to what it carried six months before. Earnings should also continue to benefit from Nike's cost-cutting program and the fast-growing direct-to-consumer sales channel.

So, if there's any big surprise this week, it's likely to come on the revenue side, where worsening industry conditions might drive a downgrade to the 2017 forecast. On the other hand, if Nike's portfolio of apparel and footwear products resonated with customers in key markets over the holiday season, then the company likely captured valuable market share from rivals while making progress toward a sales growth rebound.

Demitrios Kalogeropoulos owns shares of Nike and Under Armour (A and C shares). The Motley Fool owns shares of and recommends Nike and Under Armour (A and C shares). The Motley Fool has a disclosure policy.