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3 Things to Watch in the Stock Market This Week

By Demitri Kalogeropoulos - Feb 16, 2020 at 12:21PM

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Retail giant Walmart is one of several stocks set to make big moves over the next few trading days.

Stocks rose last week as investor enthusiasm over earnings growth outweighed concerns over the coronavirus's spread in China. The Dow Jones Industrial Average (^DJI 0.08%) and the S&P 500 (^GSPC -0.07%) each gained roughly 1% and remain in modestly positive territory so far in 2020.

The markets in the U.S. will be closed on Monday in observance of the President's Day holiday, but the remainder of the week looks to be a busy one for traders and investors.

Several highly anticipated earnings reports will be announced over the next few trading days, including reports from consumer giants Walmart (WMT 0.96%), Domino's Pizza (DPZ -0.40%), and Boston Beer (SAM 0.04%). Below we'll take a look at the key trends that might send the stocks for these three companies moving this week.

Friends drinking beer at a bar.

Image source: Getty Images.

1. Walmart's holiday traffic

The world's biggest retailer will announce its holiday season results on Tuesday in a report that should tell investors a lot about the economic health of consumers today. Walmart's stock has underperformed the market leading up to this announcement, thanks to fears of a growth slowdown for the company at the end of 2019. Rival Target (NYSE: TGT) set that stage by revealing a surprise deceleration over the holidays, and so Walmart might also post growth that slips below the 3% it enjoyed for most of last year.

Even if fourth-quarter demand gains were sluggish, the retailer still likely set a multi-year high for growth on an annual basis in 2019. Looking forward, investors will focus on the 2020 outlook that CEO Doug McMillon and his team issue this week. The challenges that are already visible include pockets of economic disruption in places like China and the U.K. Walmart also intends to spend over $11 billion continuing its multi-channel selling transformation. The chain's outlook ideally will show that management is still expecting strong returns from that initiative.

2. Domino's comparable-store sales

Domino's is on a streak of market share gains that has passed 10 years, but the pace of that expansion has slowed recently. In fact, the pizza delivery leader's comparable-store sales gains slowed in each of the last six quarters, culminating in a 2% uptick in the third quarter. A year ago, shareholders were enjoying an over 6% jump in that core growth metric.

That dynamic means investors will be watching comps on Thursday for signs that they're finally stabilizing. Domino's biggest challenge on this score is the flood of new competitors in the home delivery space, which might make it hard to recapture anything approaching the 8% comps surge investors saw in early 2018.

The good news is that Domino's is an efficient business with plenty of room to grow the store count in both the U.S. and international markets. Look for management to highlight that potential this week, especially if there's no sign of a quick rebound in the chain's comps figure.

3. Boston Beer's seltzer wars

Investors are looking forward to Wednesday's report from Boston Beer. While the big beer giants are struggling with falling demand, the maker of Sam Adams is enjoying some of its best growth in years. Depletions, a measure of sales volumes, surged 30% last quarter and are expected to rise by about 20% for the full 2019 year.

Most of that spike came from the Truly hard seltzer brand, which has attracted plenty of competition lately. We'll find out this week whether the new entrants slowed the franchise or have altered management's plans to aggressively market new launches in 2020 like the Truly lemonade seltzer. Meanwhile, shareholders should get a more detailed outlook from Boston Beer that likely targets depletion growth to remain at around 20% in 2020 as gross profit margin holds steady at roughly 50% of sales.

Demitrios Kalogeropoulos owns shares of Boston Beer. The Motley Fool owns shares of and recommends Boston Beer. The Motley Fool has a disclosure policy.

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Stocks Mentioned

Wal-Mart Stores, Inc. Stock Quote
Wal-Mart Stores, Inc.
$129.82 (0.96%) $1.24
The Boston Beer Company, Inc. Stock Quote
The Boston Beer Company, Inc.
$382.82 (0.04%) $0.15
Domino's Pizza, Inc. Stock Quote
Domino's Pizza, Inc.
$404.13 (-0.40%) $-1.62
Dow Jones Industrial Average (Price Return) Stock Quote
Dow Jones Industrial Average (Price Return)
$33,336.67 (0.08%) $27.16
S&P 500 Index - Price Return (USD) Stock Quote
S&P 500 Index - Price Return (USD)
$4,207.27 (-0.07%) $-2.97

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

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