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3 Things to Watch in the Stock Market This Week

By Demitri Kalogeropoulos - Jun 6, 2021 at 6:00AM

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Stitch Fix is one of several Wall Street favorites set to report earnings results over the next few days.

Stocks rose last week, as both the Dow Jones Industrial Average (^DJI -0.86%) and the S&P 500 (^GSPC -1.29%) gained just below 1%. That boost left indexes near their highs for the year and up roughly 13% so far in 2021.

Several widely owned stocks are reporting earnings over the next few trading days. That list includes Stitch Fix (SFIX -14.66%), Dave & Buster's (PLAY -2.29%), and Thor Industries (THO -3.30%), whose announcements we'll preview.

A young woman takes apparel out of a box.

Image source: Getty Images.

Stitch Fix's outlook

Stitch Fix's management team has given investors vastly different growth outlooks over the past few quarters, and Wall Street is looking for clarification this week. On Tuesday, the apparel giant will announce its early 2021 results, which covers a period of strong growth for its brick-and-mortar peers. But investors aren't sure Stitch Fix participated in the boom.

The chain struggled with slow shipping over the holiday season, after all, and its delivery partners likely remained stressed over the last few months. Costs rose, too, and it's not clear if Stitch Fix has room to pass those along in higher prices.

In addition to those core growth questions, investors will be watching for signs that management has a better handle on the menswear niche and on the new "buy now" functionality. Stumbles in these areas contributed to a surprisingly weak fiscal third quarter that shareholders hope to erase with better news this week.

Dave & Buster's traffic rebound

Its surging stock price implies that investors are expecting to hear stellar news in the Thursday earnings report from Dave & Buster's. The dining and entertainment giant is sure to announce better sales compared with a year ago, when most of its locations were closed or operating under lower capacity during COVID-19 shutdowns. Most investors are looking for sales to jump over 50% to $257 million, in fact.

The bigger question is just how quickly the chain can get back to setting sales volume records after customer traffic collapsed last year. Dave & Buster's needs more than just a temporary rebound to lift its growth potential, too, by opening up room for a faster store launch pace. Investors are hoping to hear management describe this rebound on Thursday while confirming that earnings are rising faster than sales. For this stock to keep trouncing the market, Dave & Buster's needs to show market-thumping sales growth and expanding operating margin through the rest of 2021.

Thor Industries' backlog

Several positive trends have investors feeling optimistic about Thor Industries' Tuesday earnings announcement. Demand for RVs has soared over the past year, and modest inventory levels means Thor, and rivals such as Winnebago (WGO -3.18%), can charge much higher prices for towables and motor homes these days .

An RV motorhome sits parked by a lake.

Image source: Getty Images.

But Thor's results might show strain from production challenges that are resulting from shortages in key automotive components. The RV giant also faced rising gasoline prices that could have crimped customer traffic at dealerships in the U.S. market. Yet heading into the report, most investors are looking for sales to rise by 80% to $3 billion.

The stock's trajectory from here will depend on the outlook that CEO Bob Martin and his team issue for 2021. Backlog, inventory levels, and the manufacturing pace will all factor into how much growth Thor believes it can achieve over the next few quarters. Demand is high, but the RV giant faces some big challenges as it works to capitalize on that favorable selling environment this year.

Demitri Kalogeropoulos has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends Stitch Fix. The Motley Fool recommends Dave & Busters Entertainment. The Motley Fool has a disclosure policy.

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Stocks Mentioned

StitchFix Stock Quote
$6.67 (-14.66%) $-1.15
Dow Jones Industrial Average (Price Return) Stock Quote
Dow Jones Industrial Average (Price Return)
$33,706.74 (-0.86%) $-292.30
S&P 500 Index - Price Return (USD) Stock Quote
S&P 500 Index - Price Return (USD)
$4,228.48 (-1.29%) $-55.26
Thor Industries, Inc. Stock Quote
Thor Industries, Inc.
$90.32 (-3.30%) $-3.08
Winnebago Industries, Inc. Stock Quote
Winnebago Industries, Inc.
$66.07 (-3.18%) $-2.17
Dave & Buster's Entertainment, Inc. Stock Quote
Dave & Buster's Entertainment, Inc.
$42.30 (-2.29%) $0.99

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

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