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3 Great Reports Amid Retail's Horrible Earnings Season

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As another earnings season passes us by, concern about the state of the retail industry is once again rising. Changing consumer habits and competition from e-commerce sites have devastated several traditional retail giants, and very few encouraging retail reports emerged this earnings season.

Of course, “very few” does not mean “none at all.” Indeed, some retailers—be it those who have been deemed Amazon (AMZN - Free Report) -proof, or those who have successfully adapted to the times—were able to produce quality results in the most recent quarter.

So who sticks out from the pack? Which retail companies actually did report solid earnings? Check out these three stocks below:

1.       Nordstrom Inc. (JWN - Free Report)

While several of its department store peers disappointed investors, Nordstrom was able to post earnings and revenue figures that topped estimates this quarter. Adjusted earnings of 65 cents per share beat the Zacks Consensus Estimate of 62 cents and extended the company’s surprise streak to five. Total revenue of $3.8 billion surpassed our consensus estimate of $3.73 billion.

Net retail sales increased 3.5%, while credit card revenues rose 28.8%. Total company comps rose 1.7%, driven by comps growth at both full-line and Rack stores. Nordstrom Rack total revenues, which include Rack stores and nordstromrack.com) gained 9.8%. So far this year, the company has opened a total of six new Rack stores and closed one full-line store—not bad in the face of shuttering department stores around the country.

Nordstrom now anticipates net sales growth of nearly 4% for fiscal 2017, which is at the high-end of its previous guidance of nearly 3–4% growth. Also, the company now envisions fiscal 2017 earnings per share in the range of $2.85–$3.00, compared with $2.75–$3.00 projected earlier.

JWN is currently a Zacks Rank #3 (Hold), but the stock does carry “A” grades in each of our Style Score categories, including the overall weighted average VGM category.

 

2.       The Home Depot, Inc. (HD - Free Report)

Home Depot reported better-than-expected earnings and revenue results before the bell on Tuesday, adding more support to the idea that it is one of the few retailers safe from the dangers of Amazon and providing more evidence that the housing market is relatively sound right now.

The company posted fiscal second-quarter earnings of $2.25 per share, which was up more than 14.2% from the year-ago quarter and comfortably beat the Zacks Consensus Estimate of $2.21. Net sales grew 6.2% to $28.1 billion, while comparable-store sales were up about 6.3% year-over-year.

Thanks to its impressive performance in the first half of the year, Home Depot now expects sales growth of 5.3% and comps growth of 5.5% for the full fiscal year. The company also raised its full-year earnings outlook to $7.29 per share from $7.15 per share.

Interestingly, Home Depot’s beat and raise was not met with immediate excitement from investors, and shares were actually down more than 3% through early afternoon trading Tuesday. However, Home Depot’s report contained plenty of strength, so it will be interesting to see if the stock rebounds soon. Currently, HD is a Zacks Rank #2 (Buy).

 

3.       Aaron’s, Inc. (AAN - Free Report)

Despite a tough retail environment, Aaron’s was able to post its fifth-straight earnings beat in the most recent quarter. Indeed, earnings of 68 cents per share surpassed our Zacks Consensus Estimate of 58 cents by a cool 17%.

Revenues of $815.6 million were up about 3.3% year-over-year and above our consensus estimate of $790 million, perhaps adding to the theory that the company’s rent-to-own model could be helping it stick out right now. However, comparable store sales are continuing to slump, which is a familiar story in the retail industry.

Nevertheless, share of Aaron’s received a nice lift from the report. The company released its earnings details before the market opened on July 28, and the stock closed more than 17% higher that day. Aaron’s also recently announced that it was purchasing its largest franchisee, a move that investors clearly feel is coming from a position of strength.

In fact, Aaron’s shares are up over 41% year-to-date, making it one of the best performing stocks in the retail sector this year. AAN currently sports a Zacks Rank #1 (Strong Buy) and an overall VGM grade of “B.”

 

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