Investors have grown cautious about Walmart (NYSE:WMT) in recent weeks. While the global retailing titan saw strong growth through most of 2019, it faced major challenges in the holiday season, which supplies an inordinate portion of its annual earnings haul. From tariffs to surging competition, from weaker income growth to a shorter peak selling season, there was no dearth of issues that might have harmed Walmart's expansion rate.

We'll find out next week whether the retailer sailed through those challenges. With that key question in mind, let's look at what investors might expect from Walmart when it announces fiscal fourth-quarter results on Tuesday, Feb. 18, and issues its outlook for 2020.

Three women shopping.

Image source: Getty Images.

Market share check-in

The growth picture for Walmart was decidedly positive through October. In fact, comparable-store sales accelerated above 3% in the third quarter. Walmart's wider expansion picture tells a story of steady strength, too, with two-year stacked comps up by 6% or more in five of the last six quarters.

Yet management noted a few "potential hurdles" ahead just before the holiday season kicked off, including mounting competition in the multichannel retailing space. These issues caught rival Target (NYSE:TGT), which in mid-January had to lower its sales outlook after announcing surprisingly weak holiday sales in categories like toys and consumer electronics. That performance knocked the retailer from its historically high growth pace at the end of 2019, and Walmart might also have seen a similar slowdown.

Growth initiatives

Walmart can't do much about contracting consumer niches like video game hardware, but management has plenty of control over where it chooses to focus its investments. That's why investors will be watching for updates on splashy initiatives like store remodels and the merging of the digital and physical sales channels through offerings like home delivery and in-store pickup.

These programs are part of an expected $11 billion in annual capital spending, and Walmart executives see that total as a major competitive advantage over rivals like Target and Kroger. Shareholders will want to see evidence next week that the initiatives are lifting sales growth without sacrificing operating margin.

The new outlook

Even if Walmart's sales come in slightly below the target, the retailer's wider 2019 performance will likely include its fastest expansion rate in the core U.S. market in about a decade. The growth has been balanced between higher customer traffic and increased average spending, which suggests there's more room to set records in 2020.

That growth picture will be complicated by weaker demand in key parts of the international business, especially China and the U.K. As a result, it's likely that Walmart takes a conservative approach to its initial 2020 forecast next week while promising more clarity as economic disruptions subside.

Investors shouldn't read too much into that short-term prediction, especially if the chain doubles down on its aggressive spending programs aimed at building an extensive offering of ultra-fast fulfillment options. Walmart has seen plenty of evidence suggesting that this strategy is raising customer satisfaction and supercharging growth, and that judgment isn't likely to change following one sluggish sales quarter.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis -- even one of our own -- helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.