3 Things to Watch in the Stock Market This Week

By Demitrios Kalogeropoulos Markets Fool.com

Stocks rose by over a full percentage point last week as the Dow Jones Industrial Average(DJINDICES: ^DJI)nearly passed the 20,000-point mark and the S&P 500 (SNPINDEX: ^GSPC)closed at a new all-time high.

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^DJI data by YCharts.

The week ahead could bring big price swings for shareholders of Bank of America (NYSE: BAC), Wells Fargo (NYSE: WFC), and Supervalu (NYSE: SVU), all of which are slated to post quarterly earnings results over the next few trading days.

SUPERVALU's growth forecast

Investors don't have high expectations for SUPERVALU's third-quarter results, which are due out on Wednesday. After all, its last quarterly outing showed that both its wholesale and retail segments were in retreat, with 5% sales declines across the board. Like other companies in the grocery industry, SUPERVALU's results are being held back by significant price deflation. Yet that unfavorable trend is compounded by the fact that the company is losing customers on the wholesale side of the business.

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SUPERVALU has projected a rebound that should start showing up in this week's earnings release. "We expect wholesale sales in the second half of this year to be higher than last year as we add new customers, grow our base business, and cycle select customer losses from last year," CEO Mark Gross told investors in late October. Shareholders will be looking for improving sales figures to back up that optimistic forecast. Meanwhile, the positive impact of the sale of the Save-a-Lot franchise should start showing up in this week's report not only through an improved balance sheet, but hopefully in rising profitability, too.

Bank of America's return on assets

Up 34% in 2016, Bank of America shares are riding high heading into this week's earnings release. The prospects for both higher interest rates and reduced regulatory burdens have investors feeling optimistic that the banking giant will enjoy strong profit growth in the coming years.

Bank of America isn't yet operating at its long-term profitability goal of generating a 1% return on assets. Yet consensus estimates are calling for solid improvements on both the top and bottom lines this quarter. The bank should post a 7% sales increase to $21 billion as earnings spike 41% to $0.38 per share. CEO Brian Moynihan and his executive team will likely have plenty to say about how the changing interest rate environment and economic growth pace are impacting its results. Beyond raw profit growth, investors will be looking for improvements in tangible book value, and continued progress at cutting costs as Bank of America approaches record levels of both capital and liquidity.

Wells Fargo's recovery plan

Thanks to a customer account scandal that's damaged its reputation and caused a shake-up in its top management team, Wells Fargo stock isn't performing nearly as well as its rival banks. In fact, shares sat out the year-end rally and rose just 3% over the last 12 months.

Image source: Getty Images.

Consensus estimates project a return to revenue growth to be announced this week, as sales tick higher by 4%, compared to a 2% decline in the third quarter. Earnings, meanwhile, should fall slightly to $1 per share from $1.03 per share in the year-ago period.

The first priority for incoming CEO Tim Sloan, though, is the tough challenge of restoring the trust of its customers. "We know that it will take time and a lot of hard work to earn back our reputation," Sloan told shareholders in October. Since then, the company has been slapped with additional government sanctions, which doesn't generate confidence that all of its regulatory issues are behind it. As a result, investors this week will be watching for evidence that Wells Fargo has made progress at repairing its relationship with both its customers and government regulators.

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