Walmart (NYSE:WMT) investors are bracing for some bad news in the next few days. While the retailing titan has predicted rising sales and earnings this fiscal year, a slowdown is inevitable following a record 2020. Profits might even fall as the chain works to consolidate all the extra volume it won during the first phases of the pandemic.

Those worries are at the top of shareholders' minds heading into Walmart's fiscal 2021 first-quarter earnings report. So let's look at the metrics to follow when the chain updates investors on Tuesday, May 18.

Still growing

The first quarter runs from February through April, which spans some unusually volatile selling weeks coinciding with the initial stock-up phase -- and then the retailing shutdowns -- at the start of the pandemic in early 2020.

A woman wearing a mask holds a bag full of groceries.

Image source: Getty Images.

That comparison sets up some potential noise in this report, which most investors are expecting to show flat global sales following a 7% spike in the prior quarter. There might be wide swings in reported customer traffic, especially in the U.S. market. But watch for CEO Doug McMillon and his team to try to cut through that noise with comments about Walmart's two-year growth rate.

The chain should discuss its market share position against rivals like Target, which also reports earnings on Tuesday. Walmart said in February that it was aiming for persistently higher volume through 2021. Management will need to show some progress on that score this week.

About those margins

Walmart, Target, Home Depot, and its peers have all predicted soaring expenses this year. They made it through several months of sales volume spikes last year that in a normal year would only occur for the few weeks between Thanksgiving and Christmas. But now it's time to pay up for that surge through investments in the supply chain and the digital sales channel.

In Walmart's case, that means capital expenditures will hit a whopping $14 billion in 2021. Investors should see signs of that outlay pressuring earnings in the first quarter, but they'll also be looking for confirmation that the spending is more about offense than defense.

Any update to the outlook

Heading into the report, Walmart's fiscal-year outlook only broadly hints at low-single-digit percentage sales growth and a slight drop in earnings per share. But shifts in consumer spending patterns, or shipping and pricing challenges, all could factor into a new fiscal-year forecast on Tuesday.

The stock has trailed the market by a wide margin over the last six months, which implies that investors aren't expecting the record 2020 year to confer much sustained benefit to the business. The flip side of that underperformance is that Walmart is more of a value today, especially for investors who like to pair dividend income with the price appreciation that comes from a dominant market position.

While the retailer might not change that modest outlook on Tuesday, it's unlikely that its new forecast will remove any shine from its attractive return profile. Thus, a stock price drop might just create a more compelling buy opportunity for investors this week.

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