Best Buy's (NYSE:BBY) stock hasn't spent any time trailing the market in 2019, and that outperformance kicked into high gear in recent weeks. The retailer's 40%-plus gain so far puts it well ahead of the market with just a few weeks left in the year.

That optimism will be put to the test in a few days when the chain announces its fiscal third-quarter results and issues its outlook for the all-important holiday season.

Let's take a closer look at where things stand and what the outlook for the electronics retailer is.

A couple shops for a new TV.

Image source: Getty Images.

Market share

Best Buy's last earnings report raised some big questions around growth that will likely be answered on Tuesday morning. Second-quarter sales rose when compared to the prior year's 6% spike, which was a win for the business. However, the 1.6% comparable-store sales increase was at the low end of the forecast that CEO Hubert Joly and his team had issued back in late May. The retailer noted strength in areas like appliances, tablets, and headphones while the video gaming and home theater categories shrank.

Management was conservative about the short-term outlook, citing U.S.-China trade war tensions and "general uncertainty" regarding consumers' behavior as it predicted a growth slowdown. But on Tuesday, we'll find out whether Best Buy passed the low bar that executives set. Management expects comps to rise by between 0.5% and 1.5% for the fiscal third quarter.

Bright spots

Operating profit margin rose to 4% of sales in Q2 compared to 3.8% a year ago. That small shift made a big difference to earnings, though. Non-GAAP earnings per share jumped 19% to $1.08 last quarter.

This week's report will test that positive trend, and expectations are for it to continue as earnings rise 11% to roughly $1.03 per share. Look for Joly and his team to credit their cost cuts for helping support profitability. Best Buy's market-share wins in the appliances segment and in its services division will also be key factors in keeping that positive trend going into fiscal 2021.

The outlook

A shorter holiday selling season this year means that Best Buy's third-quarter report happens just a few days before Black Friday. That timing will afford an unusually clear window into demand trends as the chain heads into its peak selling period.

For now, the short-term outlook calls for comps to rise by about 1% for the full year, or a bit slower than management had targeted back in May. That conservative forecast made sense at the time, given that Best Buy had to be prudent as it projected how consumers and competitors might react to rising tariff prices. With less than three months of the fiscal year to go, the retailer should be in a better position this week to determine where sales and profits will land.

Management in late September issued a bullish outlook for the five-year period that ends in fiscal 2025. That prediction includes Best Buy growing sales at a modest but significant pace while raising operating margin to 5%. As it prepares to close fiscal 2020, the company's third-quarter results should provide more confirmation showing that this forecast is achievable.