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3 Things to Watch in the Stock Market This Week

By Demitri Kalogeropoulos - Mar 12, 2021 at 6:45PM

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Nike is one of several stocks set to announce earnings results over the next few days.

Stocks rose last week, with both the Dow Jones Industrial Average (^DJI 0.03%) and the S&P 500 (^GSPC 0.01%) achieving record highs thanks to progress on COVID-19 vaccine distribution and the passage of an aggressive economic stimulus package.

A few of the market's favorite stocks will report operating results over the next few trading days, including Dow member Nike (NKE 1.47%). Let's take a look at what investors can expect from that report, along with the earnings announcements on the way from FedEx (FDX 0.93%) and Five Below (FIVE -4.74%).

A jogger laces up his shoes.

Image source: Getty Images.

Nike's holiday sales

Nike should answer some big questions for investors on Thursday. The footwear and apparel giant returned to growth in the previous quarter, with the U.S. market expanding modestly while China surged. But there were caution flags in its last announcement. Inventory levels were inflated heading into the holiday season, and the short-term outlook was unpredictable thanks to customer traffic restrictions from further COVID-19 outbreaks.

Nike's report this week will kick off the second half of its fiscal 2021, which should include a sharp growth rebound compared to last year's slump. But costs will also spike as marketing and advertising spending resumes. We'll find out on Thursday whether CEO John Donahoe and his team are still feeling cautious about the later part of the fiscal year, or whether Nike is ready to restart aggressive spending on inventory and share repurchases.

FedEx's spending plans

FedEx announces its fiscal third-quarter results on Thursday afternoon, and investors are eager to hear how the vaccine rollout, plus soaring e-commerce volumes, might be helping its business. The delivery giant's last report was encouraging, with volume jumping as the pandemic continued to push more business online. Rival United Parcel Service also set a positive tone by announcing record earnings growth in its mid-February report.

FedEx's results should be similarly strong, but investors will be focused on the company's outlook. Management credited its aggressive capital spending in past years for laying the groundwork for its latest growth spike. As a result, the transportation specialist might predict major outlays ahead as it invests in its global delivery network.

Five Below's store growth plans

Investors are eagerly awaiting the latest earnings update from Five Below, scheduled for Wednesday afternoon. The specialty retailer, which caters to young shoppers, already announced impressive holiday sales results. Its mid-January update revealed that sales jumped 10% at existing locations in November and December. That revenue spike rose to 21% after including the growth in its store footprint. "We are very pleased with our holiday sales performance," CEO Joel Anderson said in a press release.

Anderson said at the time that the full quarter's sales should rise by roughly 22%, which is right where Wall Street is expecting revenue to land this week. But Wednesday's report will also include key metrics like profitability, inventory levels, and cash flow. Five Below only noted in January that gross margins were "in line" with management's expectations.

Assuming no nasty surprises in these areas, Five Below is likely to enter a new fiscal year with cash resources and plenty of momentum it can build on as it expands its store footprint yet again in 2021.

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Stocks Mentioned

NIKE, Inc. Stock Quote
NIKE, Inc.
$108.00 (1.47%) $1.56
Dow Jones Industrial Average (Price Return) Stock Quote
Dow Jones Industrial Average (Price Return)
$31,261.90 (0.03%) $8.77
S&P 500 Index - Price Return (USD) Stock Quote
S&P 500 Index - Price Return (USD)
$3,901.36 (0.01%) $0.57
FedEx Corporation Stock Quote
FedEx Corporation
$200.90 (0.93%) $1.85
United Parcel Service, Inc. Stock Quote
United Parcel Service, Inc.
$171.04 (2.18%) $3.65
Five Below, Inc. Stock Quote
Five Below, Inc.
$117.54 (-4.74%) $-5.85

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

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