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ETFs in Focus as Big-Box Retailers Line Up for Q2 Earnings
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The second-quarter earnings season has effectively come to an end for most of the sectors, save retail, nearly 32% of which is still to report. Total earnings for the companies that have reported so far are down 15.6% on 7.8% revenue growth, with 72.2% beating EPS estimates and 83.3% beating on revenues. While the growth pace is well below the four-quarter average, revenues and earnings surprises are much better than the recent quarters.
Retail sector results reported so far were primarily from online vendors and restaurant players. The focus now shifts to traditional brick-and-mortar retailers like Wal-Mart (WMT - Free Report) , Home Depot (HD - Free Report) , Lowe’s (LOW - Free Report) and Target (TGT - Free Report) , and store channels like Nordstrom (JWN - Free Report) , and Kohls (KSS - Free Report) that are expected to report this week. In particular, e-commerce have been on a tear due to the digital shift.
Given the strong e-commerce trend, it is reasonable to be optimistic about earnings results from the above-mentioned traditional operators and their stock prices. These have the potential to push the already-mentioned ETFs upward or downward.
According to our methodology, the combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the chances of an earnings beat. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
A Peek Into the Earnings Lineup
Wal-Mart is scheduled to report on Aug 18 before market open. It has a Zacks Rank #3 and an Earnings ESP of +1.67%, indicating reasonable chances of beating estimates this quarter. The company saw a negative earnings estimate revision of a couple of cents over the past seven days for the to-be-reported quarter and delivered an average earnings surprise of 3.57% in the last four quarters. Additionally, the company has a VGM Score of A.
Home Depot has a Zacks Rank #3 and an Earnings ESP of +5.78%. It saw a positive earnings estimate revision of 35 cents for the to-be-reported quarter in the past seven days. Analysts raising estimates right before earnings — with the most up-to-date information possible — is a pretty good indicator of some favorable trends for the stock. Additionally, it delivered an average positive earnings surprise of 0.84% in the last four quarters and has a VGM Score of B. The company is expected to report earnings before the opening bell on Aug 18 (see: all the Consumer Discretionary ETFs here).
Lowe’s is slated to report earnings before the bell on Aug 19. The stock has a Zacks Rank #3 and an Earnings ESP of +4.41%. The company has seen a positive earnings estimate revision of 31 cents over the past seven days for the to-be-reported quarter and delivered an earnings surprise of 13.11% on average over the last four quarters. The stock has a VGM Score of A.
Target is also likely to report earnings on Aug 19 before the opening bell. It has a Zacks Rank #3 and an Earnings ESP of +13.85%. The company saw a positive earnings estimate revision of 10 cents over the past seven days for the to-be-reported quarter and delivered an average earnings surprise of 14.35% in the last four quarters. It has a VGM Score of A (read: Retail Sales Returning to Pre-COVID 19 Level: Best ETF Areas).
Nordstrom, which will likely report earnings on Aug 19 after the closing bell, has a Zacks Rank #4 and an Earnings ESP of +25.73%. It has seen a positive earnings estimate revision of a couple of cents for the to-be-reported quarter in the past seven days. The company delivered negative earnings surprise of 11.33%, on average, over the past four quarters. It has a VGM Score of F.
Kohls has a Zacks Rank #4 and an Earnings ESP of +22.33%. It saw a negative earnings estimate revision of a penny for the to-be-reported quarter in the past seven days. Additionally, it delivered an average negative earnings surprise of 20.97% in the last four quarters and has a VGM Score of F. The company is expected to report before the opening bell on Aug 18.
Conclusion
With some earnings surprises in the cards, retail ETFs are expected to see smooth trading in the days ahead.
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ETFs in Focus as Big-Box Retailers Line Up for Q2 Earnings
The second-quarter earnings season has effectively come to an end for most of the sectors, save retail, nearly 32% of which is still to report. Total earnings for the companies that have reported so far are down 15.6% on 7.8% revenue growth, with 72.2% beating EPS estimates and 83.3% beating on revenues. While the growth pace is well below the four-quarter average, revenues and earnings surprises are much better than the recent quarters.
Retail sector results reported so far were primarily from online vendors and restaurant players. The focus now shifts to traditional brick-and-mortar retailers like Wal-Mart (WMT - Free Report) , Home Depot (HD - Free Report) , Lowe’s (LOW - Free Report) and Target (TGT - Free Report) , and store channels like Nordstrom (JWN - Free Report) , and Kohls (KSS - Free Report) that are expected to report this week. In particular, e-commerce have been on a tear due to the digital shift.
As a result, retail ETFs SPDR S&P Retail ETF (XRT - Free Report) , VanEck Vectors Retail ETF (RTH - Free Report) and First Trust Nasdaq Retail ETF have gained 13.8%, 5.8% and 6.4%, respectively, in the past month. Online retail ETFs Amplify Online Retail ETF (IBUY - Free Report) and ProShares Online Retail ETF (ONLN - Free Report) have climbed 16.8% and 14%, respectively (read: Online Retail ETFs to Keep Soaring in Q3 as Virus Hits Hard).
Given the strong e-commerce trend, it is reasonable to be optimistic about earnings results from the above-mentioned traditional operators and their stock prices. These have the potential to push the already-mentioned ETFs upward or downward.
According to our methodology, the combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the chances of an earnings beat. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
A Peek Into the Earnings Lineup
Wal-Mart is scheduled to report on Aug 18 before market open. It has a Zacks Rank #3 and an Earnings ESP of +1.67%, indicating reasonable chances of beating estimates this quarter. The company saw a negative earnings estimate revision of a couple of cents over the past seven days for the to-be-reported quarter and delivered an average earnings surprise of 3.57% in the last four quarters. Additionally, the company has a VGM Score of A.
Home Depot has a Zacks Rank #3 and an Earnings ESP of +5.78%. It saw a positive earnings estimate revision of 35 cents for the to-be-reported quarter in the past seven days. Analysts raising estimates right before earnings — with the most up-to-date information possible — is a pretty good indicator of some favorable trends for the stock. Additionally, it delivered an average positive earnings surprise of 0.84% in the last four quarters and has a VGM Score of B. The company is expected to report earnings before the opening bell on Aug 18 (see: all the Consumer Discretionary ETFs here).
Lowe’s is slated to report earnings before the bell on Aug 19. The stock has a Zacks Rank #3 and an Earnings ESP of +4.41%. The company has seen a positive earnings estimate revision of 31 cents over the past seven days for the to-be-reported quarter and delivered an earnings surprise of 13.11% on average over the last four quarters. The stock has a VGM Score of A.
Target is also likely to report earnings on Aug 19 before the opening bell. It has a Zacks Rank #3 and an Earnings ESP of +13.85%. The company saw a positive earnings estimate revision of 10 cents over the past seven days for the to-be-reported quarter and delivered an average earnings surprise of 14.35% in the last four quarters. It has a VGM Score of A (read: Retail Sales Returning to Pre-COVID 19 Level: Best ETF Areas).
Nordstrom, which will likely report earnings on Aug 19 after the closing bell, has a Zacks Rank #4 and an Earnings ESP of +25.73%. It has seen a positive earnings estimate revision of a couple of cents for the to-be-reported quarter in the past seven days. The company delivered negative earnings surprise of 11.33%, on average, over the past four quarters. It has a VGM Score of F.
Kohls has a Zacks Rank #4 and an Earnings ESP of +22.33%. It saw a negative earnings estimate revision of a penny for the to-be-reported quarter in the past seven days. Additionally, it delivered an average negative earnings surprise of 20.97% in the last four quarters and has a VGM Score of F. The company is expected to report before the opening bell on Aug 18.
Conclusion
With some earnings surprises in the cards, retail ETFs are expected to see smooth trading in the days ahead.
Want key ETF info delivered straight to your inbox?
Zacks’ free Fund Newsletter will brief you on top news and analysis, as well as top-performing ETFs, each week. Get it free >>