3 Things to Watch in the Stock Market This Week

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Stocks posted solid gains for the second straight week last week as strong earnings reports sent both the Dow Jones Industrial Average (DJINDICES: ^DJI) and the S&P 500 (SNPINDEX: ^GSPC) higher by more than a full percentage point. Indexes are now back up by more than 2% since the start of the year.

Earnings season doesn't let up over the week ahead. In fact, dozens of big-name companies are set to announce their holiday-quarter results in the next few trading days.

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Let's see what we can expect from the companies set to release some of the most anticipated earnings reports: Lowe's (NYSE: LOW), 3D Systems (NYSE: DDD), and TJX Companies (NYSE: TJX).

Lowe's market share

Lowe's reports its earnings on Wednesday and, given the recent stellar performance from Home Depot (NYSE: HD), its results should show healthy growth powered by a robust home improvement market. However, Lowe's isn't benefiting from the industry gains to nearly the same degree as Home Depot.

Comparable-store sales are on track to rise by just 3.5% for 2017, while Home Depot managed roughly twice that expansion pace. Lowe's is trailing its bigger rival on key financial metrics, too, including operating margin and return on invested capital.

Investors will be watching the retailer's customer traffic figure, since that has been a persistent area of weakness for much of 2017. It's a metric that CEO Robert Niblock and his team have vowed to improve, but traffic slipped to below 1% in the third quarter from 3% in the prior quarter. Without evidence of a rebound on that number, Lowe's 2018 comps forecast is likely to imply more market-share losses in the year ahead.

3D Systems' sales forecast

Slated for release following the market close on Wednesday, 3D Systems' fourth-quarter report isn't likely to wow investors. After all, the 3D printing specialist's last quarterly showing was marked by shrinking sales, diving profitability, and an operating loss that worsened to $32 million from $22 million a year ago. Executives warned at the time that it had become so difficult to predict operating trends that they were withdrawing their 2017 guidance.

Thus, investors have low expectations for the fourth quarter. Specifically, shareholders are hoping to see an improvement in the pace of sales declines for the core 3D printer segment, but that's a tall order given the aggressive competition in the industry.

Cost cuts will likely feature prominently in this week's report, too, as executives struggle to bring the company closer to profitability. 3D Systems should provide an update on its new Figure 4 system. The product's launch has been delayed into the first half of 2018, and we'll find out this week whether executives stand by the delayed timeline.

TJ Maxx Companies' customer traffic

Off-price retailer TJX Companies, which owns the popular TJ Maxx, Marshalls, and HomeGoods banners, will announce its holiday-quarter results on Wednesday morning. Investors are skittish heading into this report, since sales growth slowed to a halt in the third quarter after expanding by 3% in the prior quarter.

Executives blamed hurricane store closures and unseasonably warm weather for that decline, and they cited a few metrics that support the idea that their operating trends should bounce back into modestly positive territory. Customer traffic was positive across all its retailing segments, for example, and TJX Companies saw a slight uptick in profitability as gross margin improved to 29.8% of sales from 29.5%.

Overall, management is targeting comps of between 1% and 2% for the fourth quarter. The retailer might forecast roughly the same pace of growth for 2018, and those returns should be bolstered by a quickly growing dividend payment.

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Demitrios Kalogeropoulos owns shares of Home Depot. The Motley Fool has the following options: short May 2018 $175 calls on Home Depot and long January 2020 $110 calls on Home Depot. The Motley Fool recommends 3D Systems, Home Depot, Lowe's, and The TJX Companies. The Motley Fool has a disclosure policy.

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