Stocks posted significant gains last week, as both the S&P 500 (SNPINDEX:^GSPC) and the Dow Jones Industrial Average (DJINDICES:^DJI) gained more than 1% to march closer toward record territory, up over 11% so far in 2019.
Fourth-quarter earnings results are still in full swing, and retailers will take their turn in the spotlight over the next few days. In fact, holiday-season reports from Home Depot (NYSE:HD), Best Buy (NYSE:BBY) and Foot Locker (NYSE:FL) each have the potential to spark volatility in the respective stocks.
Here's what investors might expect to see from these companies.
Home Depot's dividend increase
Home Depot on Wednesday will close out a fiscal year that will push its annual sales further above $100 billion. Rival Lowe's announces its results the following day, but there's little question in investors' minds about who won the 2018 matchup. Home Depot's market share expanded through the year even as operating margin ticked up to a new high of 14.5% of sales. The comparable figure at Lowe's is stuck in the single digits and has been worsening thanks to the chain's struggles to keep its shelves well stocked in recent quarters.
Wednesday's report is likely to show more evidence of that performance gap, but investors will be more interested in Home Depot's outlook for the new year. Management hinted last quarter that profitability might soon stabilize or decline after years of expanding, which might hurt the stock. Yet income investors should still receive a significant dividend payout increase, given the robust earnings growth Home Depot managed through the year.
Check out the latest Home Depot earnings call transcript.
Best Buy's sales growth
Consumer-electronics retailer Best Buy announces its fourth-quarter results on Wednesday, and investors are eager to find out how well the chain did over the critical holiday season. There's no shortage of worries about a potential growth slowdown as consumers reduce their upgrade pace for core products such as TVs and smartphones.
Best Buy has a flexible selling model, though, which has helped it steadily increase sales through the first nine months of the year while protecting gross profitability. We'll find out on Wednesday whether those encouraging trends held up during the company's most important sales period. For its part, management predicted in late November that sales growth would slow to between 0% and 3%, from 4% in the prior quarter. That prediction occurred before the peak selling weeks around the Thanksgiving and Christmas holidays, though, and so actual results may differ significantly from the projected figures.
Foot Locker's 2019 outlook
Foot Locker's last quarterly report showed gathering momentum for the retailer's growth rebound. Sales gains sped up for the second consecutive quarter and profitability ticked higher as the chain cut back on its level of promotions. That success has raised the bar for the fourth-quarter report due out on Friday, March 1.
CEO Dick Johnson said in late November that executives were optimistic about a further strengthening of sales and profits thanks to a few positive trends, including an influx of innovative sneaker releases from Nike and healthy inventory levels in the broader industry. If things play out about as management expects, then comparable-store sales should rise by around 4% for the full year as gross profit margin expands by a bit more than a full percentage point.
The actual results will go a long way toward informing Foot Locker's outlook for 2019. Another moderate growth year would be further evidence that 2017's sales and profitability declines were outliers in a broader trend of steady gains for the footwear specialist.