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3 Things to Watch in the Stock Market This Week

Demitrios Kalogeropoulos, The Motley Fool

Stocks rose last week, as both the S&P 500 (SNPINDEX: ^GSPC) and the Dow Jones Industrial Average (DJINDICES: ^DJI) inched higher by less than 1%. The increase pushed indexes a bit closer to the 2019 highs set in late April, as stocks are up significantly so far this year.

^SPX Chart

^SPX data by YCharts.

Winnebago (NYSE: WGO), Kroger (NYSE: KR), and CarMax (NYSE: KMX) are set to report earnings results over the week ahead, and below we'll take a look at what investors can expect to see from these three announcements.

Winnebago's backlog

The recreational vehicle market is on pace for its first annual sales decline in nine years, but investors are betting that Winnebago can grow through that slump. Sure, the RV giant has reported falling demand at dealerships and rising material costs in recent months. However, its business is outperforming rivals like Thor Industries by a wide margin.

On Wednesday, investors will be looking for more signs of market-share gains from Winnebago. For its part, Thor Industries last week said it needed to cut production to better match the reduced pace of sales volumes in its towable and motorized RV products. In contrast, Winnebago in late March predicted that its business would stabilize during the quarter. Evidence of that stability would be reflected in key metrics like profitability, sales volumes, and backlog levels, which all need to show improving trends for Winnebago's stock rally to push deeper into 2019.

Kroger's market share

Kroger's peers recently reported solid growth results, yet investors aren't expecting similarly strong numbers from Kroger on Thursday. After all, the supermarket giant has been losing ground to Walmart over the past few quarters after the retailing titan raised its game on groceries and fresh produce. Walmart last week credited its grocery segment for helping boost customer traffic and lifting comparable-store sales growth to over 3% for the fourth consecutive quarter. Kroger's expansion pace has been closer to 2% lately despite aggressive price cuts.

A man shopping for groceries

Image source: Getty Images.

Shareholders are hoping to see the company break out of that funk by using the same multichannel selling strategy that has helped Walmart and Target both generate robust demand in stores and online. So far, investors have only seen the cost impact of these growth initiatives, and that helps explain why Kroger's stock has underperformed its biggest retailing peers.

CarMax's online business

Its shares have trounced the market in the three months since its last earnings report, and that rally raises the stakes for CarMax's announcement on Friday. The used-vehicle retailer had plenty of good news for investors back in late March, when the chain revealed a return to sales growth, improving market-share trends, and steady profitability. Investors are expecting this positive momentum to continue, especially since demand in the early weeks of the quarter was likely lifted by shoppers' receipt of tax refund payments. Most investors who follow the stock are predicting that sales will rise by 7% this quarter compared to 6% in the prior quarter.

In addition to key growth and engagement metrics like customer traffic and gross profit per vehicle, look for CEO Bill Nash and his team to spend time discussing management's e-commerce strategy. Positive early results from moving the car-buying process online should support a quick rollout of the initiative across the country. But the key question going forward is how that shift will affect sales and profitability trends over the next few years.

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Demitrios Kalogeropoulos has no position in any of the stocks mentioned. The Motley Fool recommends CarMax. The Motley Fool has a disclosure policy.