Wal-Mart's U.S. rebound is in the spotlight

* Wal-Mart to report Q3 earnings on Tuesday, Nov. 15

* Analysts see key U.S. sales up 0.3 pct

* Wal-Mart shares up heading into quarterly report

By Jessica Wohl

Nov 15 (Reuters) - Wal-Mart Stores Inc needs to show investors how it will sustain its renewed momentum without sacrificing profitability as sales at its U.S. stores have finally started to perk up.

Sales at Wal-Mart U.S. stores open at least a year, a key metric known as same-store sales, rose in July, August and September, Wal-Mart told investors last month.

That turnaround nearly ensures that Wal-Mart U.S., by far the largest unit of the world's largest retailer, would finally post a positive quarter, reversing a slump that weighed on the company for nine consecutive quarters.

Shares of Wal-Mart have risen 7.6 percent since Oct. 11, the day before the company gave its sales update.

"Expectations are pretty high going into the quarter," said Morningstar analyst Michael Keara. "They'll do well, the question is just how much they have to give up to do well."

Wal-Mart has been working to keep its prices low in the face of inflation and stepped up competition. It is also spending more on holiday advertising, adding pressure to its margins at a critical time of year.

The third quarter of fiscal 2012, which ran from August through October, is expected to mark the first time that Wal-Mart U.S. same-store sales rose for a full quarter since the first quarter of fiscal 2010.

Analysts polled by Thomson Reuters, on average, expect Wal-Mart U.S. same-store sales rose 0.3 percent in the quarter. The company itself predicted such sales would come in between a 1 percent drop and a 1 percent increase.

Click here for a graphic on Wal-Mart U.S. same-store sales:

While same-store sales have turned a corner, the traffic in Wal-Mart stores was still down, the company said in October.

"Gas price inflation has come in a little bit, I think that gives their consumer a little breathing room and I think it gives, in the shorter term, a little breathing room to Wal-Mart," said Stifel Nicolaus analyst David Schick.

Same-store sales account for about 98 percent of Wal-Mart's sales in the United States, so ending the slump at existing stores is critical for Wal-Mart.

The sales momentum is especially critical as the holiday season, the most important time for retailers, has begun.

"The way the stock is trading right now it seems like investors are betting that Wal-Mart has won Christmas already," Keara said of Wal-Mart.

Wal-Mart shares have risen about 9.2 percent so far this year, while shares of rival Target Corp, which is set to report results on Nov. 16, have fallen about 12.4 percent.