By now, investors have come to expect good news from TJX Companies' (NYSE:TJX) earnings reports. The off-price retailer has boosted customer traffic at its core TJ Maxx and Marshalls chains in each of the last 17 quarters. And its profitability has held up through a range of selling conditions, thanks to a flexible business model that pounces on temporary inventory struggles in the full-price segment of the market.

These past successes raise the bar for TJX's fourth-quarter report, due out on Wednesday, Feb. 27. Let's look at the metrics that will determine whether investor cheer -- or pan -- the upcoming results.

A man holds several shopping bags.

Image source: Getty Images.

Closing out a strong year

TJX entered the holiday season under ideal operating conditions. Rather than slowing, as management had predicted, sales growth sped up to a 7% rate in the prior quarter. Each of its divisions contributed to that market-thumping result, but its core Marshalls and TJ Maxx brands led the way with a 9% comparable-store sales jump compared to a modest decline in the prior-year period.  

CEO Ernie Herrman and his team said in late November that the early days of the fourth quarter were off to a strong start, too, but they issued a conservative outlook that called for sales gains to slow to between 3% and 4%. Still, hitting that figure would ensure that full-year growth reaches 5% to mark a significant increase from the 1% to 2% range management targeted at the start of the year.

That sales growth won't be as valuable if TJX had to slash prices or overpay for merchandise to achieve market-share gains against peers like Ross Stores. But there are two reasons why investors shouldn't fear that result.

First, TJX's inventory position was light heading into the holiday quarter. Thus, its army of buyers stood ready with all the resources they needed to make the opportunistic purchases that allow for a merchandise price gap of between 20% and 60% below that of full-price retailers. Second, its profit margin has held up fine over recent quarters, with the core retailing division achieving a slight increase to 13.6% of sales through the last nine months compared to 13.5% in the year-ago period.

Outlook and dividend

Shareholders have two other reasons to look forward to this report, since it should include a rough outlook for the upcoming fiscal year and a potentially large dividend increase. The 2019 sales forecast is likely to be modest. So much of the company's growth occurs in the second half of the year, after all, and so it will be a while before management has a good idea about how the wider industry trends will play out by then.

The dividend increase might be cause for more immediate celebration on the part of shareholders. TJX hiked its payout by 25% at this time last year even though management was expecting far weaker sales and profit gains for 2018. Now, with key metrics like customer traffic and operating margin accelerating, the company could be in a good position to both reinvest in the business and deliver robust cash returns to investors through dividends and share repurchases in 2019.