3 Things to Watch in the Stock Market This Week

Stocks rose last week, as both the Dow Jones Industrial Average (^DJI 0.06%) and the **S&P 500 **(^GSPC 0.24%) gained over 1% in the first full trading week of 2021 following significant growth last year.

A few widely owned companies will announce earnings results over the next few trading days, including** KB Home **(KB 1.70%), Progress Software (PRGS +13.64%), and **Citigroup **(C 0.76%). Let's take a look at the trends that might send their stocks moving this week.

Image source: Getty Images.

KB Home's delivery rate

KB Home announces its fourth-quarter metrics on Tuesday, and investors have some big questions heading into that report. The home builder's last update was a mixed bag, with profit margin expanding while the pace of new home deliveries fell. KB Home said back in late September that the housing market had strengthened and that buyers are paying higher prices. But the big question is whether the delivery volume will continue to shrink.

CEO Jeffrey Mezger and his team said in their official outlook that relaxing COVID-19 containment efforts helped lift the business during the summer months. We'll find out this week if traffic trends slowed during the outbreaks that followed.

Heading into the report, the best metrics investors have are the 8% backlog increase that KB Homes reported back in September, along with a modest decrease in order cancellation rates, down to roughly 12%. Wall Street will be looking for improvements in both metrics on Tuesday.

Citigroup's revenue slump

Citigroup is one of the first banking giants to announce fourth-quarter results, which means a lot of attention will be heaped on its Friday report. Shares trailed the market by a wide margin in 2020. Yet the stock rallied in the final weeks of the year on hopes of a strengthening economic rebound on the way.

Investors will be watching metrics like credit card purchasing volume and deposit growth for signs that consumer spending is holding up. Citigroup also reported an encouraging drop in loan losses, which might help support earnings again this quarter.

C Operating Revenue (Quarterly YoY Growth) data by YCharts

Wall Street is expecting operating trends to get worse before they get better, though. Most investors who follow the stock are looking for revenue to decline roughly 10% this quarter (compared to last quarter's 7% drop) while earnings fall to $1.28 per share from $2.15 per share a year ago.

Progress Software's profit margin

Progress Software didn't dazzle investors with surging growth in 2020, but the business did grow through a tough selling environment while boosting profitability. Sales rose 3% in the fiscal third quarter that ended in August while gross profit margin jumped to over 86%.

Acquisitions played a big role in the tech company's expansion strategy in recent quarters, and investors should see continued contributions from purchases including Chef when Progress reports Q4 results on Thursday.

Executives in late September issued an outlook that calls for sales to land between $125 million and $129 million for the period, implying another quarter of roughly 3% gains. Investors might cheer that result on Thursday, especially if it is paired with rising profit margins and a big cash pile that Progress can use for further acquisitions and to fund its steadily growing dividend over the next few years.