Wal-Mart (NYSE:WMT) is scheduled to release fourth quarter results on Feb. 19th. Investors would love to see it build some positive momentum with comparable-store sales (comps) growth in U.S. locations. After six negative quarters, Wal-Mart reported 0.5% comps growth in its U.S. stores for the third quarter of 2014. Beating analyst predictions for sales and earnings for the holiday shopping season should only up the excitement.

Investors worry about the recent rating downgrade from Morgan Stanley and other firms, which have cited cyclically high valuations for the move. A solid fourth quarter report should ease investor concerns, but can Wal-Mart give them this belated Valentine's Day gift?

Source: Wal-Mart

Efforts to boost comps
Wal-Mart expects comps at U.S. stores to have grown 0.5% to 1% in the fourth quarter, and at least three factors suggest the company will meet this goal.

No. 1: U.S. retailers had the best holiday season since 2011, according to the National Retail Federation. Excluding automobiles, gas stations, and restaurants, retail sales increased 4% year-over-year in November and December. One likely driver was Wal-Mart, which was ready to counter the intense competition and had cut prices on 20,000 items.

No. 2: In November, the company issued a memo requiring U.S. stores to offer huge discounts on fresh and frozen food before their expiration dates. This should not only pump up sales but also minimize daily loss. The memo also told stores to promptly replace the "expired" items with new stock, hopefully bolstering shopper confidence and bumping footfalls.

No. 3: Low oil prices likely gave the main customer base of low-income consumers greater spending power. 

Wal-Mart small-format stores also contributed nicely to comps in the first nine months of fiscal 2015 and should continue that trend in the fourth quarter. In the third quarter, Neighborhood Market same-store sales grew 5.5% and drove overall U.S. comps. Wal-Mart expects pharmacy and consumables to be the key drivers for the upcoming report. 

Source: Company press release. Chart by author

Sam's Club could do better
Similar to Wal-Mart, Sam's Club comps shifted from negative to flat to a slight improvement of 0.5% in the first three quarters of fiscal 2015. The situation could further improve in the fourth quarter as the wholesale club took its own steps to boost sales.

Knowing full well that small businesses are a big part of sales, Sam's Club rolled out three new services for payroll, healthcare, and legal solutions. In December, it also launched an exclusive furniture collection from novelist Nicholas Sparks. 

Sam's Club is also wooing higher-income shoppers by focusing on organic food offerings. The category expanded significantly in the third quarter and plans were afoot to double it by year-end. With increased demand for organic fare and Sam's competitive pricing, comps should benefit.

Margins still squeezed
Operating costs have remained a concern for Wal-Mart. Higher healthcare and labor costs dragged on third quarter margins. The company is trying to rein in costs by opening more Neighborhood Market stores and emphasizing online sales to reduce store operating costs. 

The oil price drop could also positively impact fuel costs. Wal-Mart transports 80% of its purchased goods to its distribution facilities via a fleet of trucks. Sam's Club, too, uses a private fleet for warehousing.

Expect the unexpected
After the third quarter, Wal-Mart cut its earnings forecast for the fiscal year to $4.92 to $5.02 from $5.10 to $5.45 to reflect growing operating expenses and increased investments. Wall Street expects Wal-Mart to post full-year earnings of $4.99 per share on sales of $487 billion. The fourth quarter seems to have all the right ingredients to help Wal-Mart boost both comps and margins. If things go as planned, investors should be able to enjoy a second Valentine holiday.