3 Things to Watch in the Stock Market This Week

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Stocks retreated last week, as both the S&P 500 (SNPINDEX: ^GSPC) and the Dow Jones Industrial Average (DJINDICES: ^DJI) shed 2% on investor fears over an escalating trade war between the U.S. and China. Indexes remain sharply higher for the year, though, with the Dow up over 11% so far in 2019.

Investors will be watching earnings reports from a few big companies over the next five trading days. Let's take a look at the metrics that could get shares of Take-Two Interactive (NASDAQ: TTWO), Tilray (NASDAQ: TLRY) and Walmart (NYSE: WMT) moving this week.

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Take-Two's release outlook

Like its industry peers, Take-Two Interactive's stock has trailed the market so far this year on worries that gamers will abandon its titles in favor of free-to-play battle royale games like Fortnite. Yet the developer is having a banner fiscal year so far. Sales more than doubled last quarter thanks to the popularity of Red Dead Redemption 2. Operating income is soaring, too, up to $149 million over the past nine months compared to just $48 million in the prior-year period.

CEO Strauss Zelnick and his team boosted their fiscal year outlook in early February and the new forecast calls for sales to range from $530 million to $580 million this quarter, with earnings per share landing between $0.67 and $0.77. But investors will likely be more interested in Take-Two's guidance for the new fiscal year and any updates on the strength of its release pipeline when it reports results on Monday afternoon.

Tilray's growth strategy

Marijuana specialist Tilray will announce its fiscal first-quarter results on Tuesday afternoon in a report that's likely to spur sharp stock-price swings. The pot giant's shares have fallen sharply over the last few months following an earnings report in late March that many investors panned. Sure, sales jumped 200% in part thanks to rising demand for cannabis oil in parts of the U.S. Yet Tilray still booked just $43 million in revenue for the full 2018 year, making it hard to justify its massive market capitalization of over $4 billion.

On Tuesday, investors will be watching for signs that the pot specialist can eventually grow sales to many multiples of its current level. That means the company must defend its positioning against bigger peers in the key Canada market while building a platform to market in the U.S. and Europe. Yet fundamental questions remain about whether Tilray, or any of its rivals, can build a defensible brand and business around marijuana production and complementary products like cannabidiol. As the company is expected to post just $20 million of sales in the first quarter, those concerns probably won't be alleviated this week.

Walmart's digital sales

Walmart has a few important questions to answer for investors when it posts results on Thursday. The retailing titan closed out a solid fiscal 2018 in February, complete with surging e-commerce sales and healthy customer traffic. However, there were some disappointments in its latest operating trends, including poor profitability in the online segment. Executives aren't satisfied with the integration of the digital and in-store sales channels, either.

Fiscal 2020 will include lots of investments aimed at fixing these weak spots. Walmart plans to spend $11 billion on its business this year, to add thousands of additional products to its online inventory, reduce shipping time, and introduce home grocery delivery to more locations across the country. Unfortunately, while the costs of these projects are concrete and immediate, it will be some time before investors have a clear picture of how well these efforts have positioned Walmart for earnings gains in the years to come.

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Demitrios Kalogeropoulos has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends Take-Two Interactive. The Motley Fool has a disclosure policy.