Earnings season keeps rolling on this week, and so investors can expect plenty of volatility ahead in individual stocks. A few of the most anticipated reports set to be released include those from Home Depot (NYSE:HD), Wal-Mart (NYSE:WMT), and Foot Locker (NYSE:FL).
Home Depot's customer traffic
Home Depot will post its results before the market opens on Tuesday, and consensus estimates call for the home-improvement giant's sales to rise 4%, to $23.7 billion. While that pace would trail rival Lowe's (NYSE: LOW) and its expected 11% gain, the more illustrative match-up is in comparable-store sales, where Home Depot has trounced Lowe's in recent years. Its comps improved by 5.6% last year, compared to Lowe's 4.2%.
The performance gap is expected to continue in 2017: Home Depot has projected a 4.6% comps improvement, while Lowe's sees 4.1% growth in the new fiscal year. The company's expanding presence in the professional customer segment will be key to its continued market share gains. Investors will also be looking for progress in an e-commerce initiative that has put Home Depot among a small class of traditional retailers who are thriving as customer traffic moves to online channels. Finally, look for the company to update its full-year forecast based on the latest economic trends in the housing market.
A simple focus on value helped Wal-Mart become the biggest retailer on the planet and delivered huge gains to long-term investors in the process. Yet as consumers flock to online shopping, the retailing giant has given up a significant chunk of profits recently as it invests in its existing stores while building up its own e-commerce platform.
Investors are expecting another dip this week, with profits set to fall to $0.96 per share from $0.98 per share a year ago. Revenue should tick higher by less than 2% to $117.8 billion. The company is slated to report Thursday before the market opens.
Customer traffic trends will be key to watch, since they've only improved modestly over the last few quarters. Management credits initiatives like boosting in-stock levels and raising employee wages for the rebound. That's why continued traffic gains are essential to supporting the notion that Wal-Mart can defend its huge, expensive store footprint against rising threats from online-only rivals.
Foot Locker's growth trends
Investors aren't excited about Foot Locker's results set to publish before the market opens on Friday. After all, the apparel retailer warned in late April that comps slumped in the first month of the quarter thanks mainly to a delay in tax refunds. Growth picked up once those checks started flowing later on, but the boost "did not fully offset the slow start to the quarter," CEO Richard Johnson explained, as the company lowered its first-quarter outlook.
Johnson and his team still aim to boost comps in the mid-single-digits for the year to keep up the solid expansion pace they managed in 2016. In addition to any updated guidance, profitability will likely get plenty of attention in Friday's report. If the company had to slash prices to keep inventory moving, that might suggest the struggles that showed up toward the end of 2016 were part of a more fundamental industry shift that threatens its growth outlook.