Back to top
Read MoreHide Full Article

The one-year stock price of Macy’s (M - Free Report) and the department store industry chart vividly tells the story; these are tough times for the space. Macy’s shares have lost -48.2% of their value over the past 12 months, underperforming the Zacks Department Store industry’s -36.2% decline.

The green line in the chart shows Amazon’s performance over the same time period. Amazon is working on a number of fronts, but it has been a big contributor to the department store space’s ongoing pain. The issues are well known by now - these operators needed literally to reinvent their businesses to effectively operate in an environment where consumers are steadily shifting their spending dollars to the online medium instead of visiting the physical store.

As of Friday, August 11th, we now have Q2 results from 23 of the 42 retailers in the S&P 500 index. This week brings results from the big-box operators Wal-Mart (WMT - Free Report) , Target (TGT - Free Report) , Home Depot (HD - Free Report) and others. Total earnings for the 23 retailers that have reported already are down -1.7% from the same period last year on +6.7% higher revenues, with 73.9% beating EPS estimates and 78.3% beating revenue estimates.

Please note that we have a stand-alone Retail sector, unlike the official Standard & Poor’s placement of this space in the Consumer Discretionary sector. The Zacks Retail sector includes, besides the traditional department stores and other brick-and-mortar retailers, the online vendors like Amazon and Priceline and restaurant operators. Results from the online vendors and most of the restaurant operators are already behind us at this stage.  

The side-by-side charts below compare the sector’s results thus far with what we have seen from the same group of 23 retailers in other recent periods.

The aggregate growth pace from the 23 retailers that have reported results already are tracking below what we had seen from the same companies in other recent periods. Positive surprises are as numerous in this sector as they have been all along in other sectors this earnings season. We will get Retail’s complete picture following this week’s results from Wal-Mart, Target, Home Depot and others.

Q2 Earnings Season Scorecard (as of Friday, August 11, 2017)
 
The Q2 earnings season has come to an end for 10 of the 16 Zacks sectors, with results from 456 S&P 500 members or 91.2% of the index’s total membership already out. Total earnings for these companies are up +10.8% from the same period last year on +5.8% higher revenues, with 74.3% beating EPS estimates and 68% beating revenue estimates.

The table below shows the current Q2 Scorecard

The charts below compare the Q2 results thus far from the 456 index members with what we had seen from the same group of companies in other recent periods.

As pointed out earlier, the proportion of companies beating revenue estimates is tracking above historical periods (right-hand chart). The earnings and revenue growth pace for these 456 companies is below what we had seen from the same sample of companies in Q1, but an improvement over other recent periods.

Here are the four takeaways from the results that have come out already.

First, the earnings and revenue growth pace has steadily gone up relative to pre-season expectations. Total Q2 earnings for the index are currently expected to be up +10.1% from the same period last year on +5.3% higher revenues.

Please note that the +10.1% growth rate is the blended growth rate; it combines the actual growth for the 456 S&P 500 members that have reported with estimates for the still-to-come 44 index members. At the start of the quarter, the expectation was for earnings growth of +7.9%, which came down as the quarter unfolded, reaching as low as +5.6% just ahead of the start of the reporting season.

The deceleration in Q2 earnings growth notwithstanding, the quarter’s earnings tally is on track to reach a new all-time quarterly record, surpassing the 2016 Q4 level, as you can see in the chart below. The chart below contrasts the estimated 2017 Q2 total of $293.8 billion with the actual earnings for the preceding four quarters and estimates for the following four periods.

This record isn’t expected to last very long, with each of the coming quarters expected to bring in ever bigger earnings tallies.

Second, an above-average proportion of companies are beating estimates, particularly revenue estimates. We typically don’t give this factor a lot of weight in evaluating or assessing an earnings season since we all know that management teams are experts in managing expectations. Even then, the trend emerging in the Q2 earnings season is noteworthy for two reasons. First, estimates for the quarter had not fallen by as much as had historically been the case. Second, the proportion of positive revenue surprises, a much harder variable to manipulate relative to earnings, is really off the chart.

The chart below shows the proportion of 456 S&P 500 members that have beaten both EPS and revenue estimates and how that compares to historical periods.

Third, Q2 growth is broad-based and not dependent on one or two sectors. There is strong growth contribution from the Finance, Technology and Energy sectors in Q2, but we have 13 of the 16 Zacks sectors on track to produce more earnings than the year-earlier period.

Fourth, estimates for the September quarter have started coming down, but the pace and magnitude of negative revisions compares favorably to other comparable periods. Total Q3 earnings are currently expected to be up +3.9% from the same period last year, down from +6.3% at the start of July. The chart below shows the evolution of Q3 growth expectations since the start of the period.

This is a reassuring start on the revisions front, but we will have to see if this trend will remain in place through the rest of this earnings season.

The chart below shoes Q2 earnings growth expectations contrasted with what is expected in the following three quarters and actual results in the preceding 5 quarters. As you can see in the chart below, this growth pace is expected to continue through the rest of the year.

Note: Sheraz Mian manages the Zacks equity research department. He is an acknowledged earnings expert whose commentaries and analyses appear on Zacks.com and in the print and electronic media. His weekly earnings related articles include Earnings Trends and Earnings Preview. He manages the Zacks Top 10 and Focus List portfolios and writes the Weekly Market Analysis article for Zacks Premium subscribers.

The Hottest Tech Mega-Trend of All

Last year, it generated $8 billion in global revenues. By 2020, it's predicted to blast through the roof to $47 billion. Famed investor Mark Cuban says it will produce "the world's first trillionaries," but that should still leave plenty of money for regular investors who make the right trades early.

See Zacks' 3 Best Stocks to Play This Trend >>

Here is a list of the 126 companies including 16 S&P 500 members reporting this week.

Company Ticker Current Qtr Year-Ago Qtr Last EPS Surprise % Report Day Time
SYSCO CORPSYY0.710.640.00%MondayBTO
AZUL SAAZUL0.01N/AN/AMondayBTO
CANADIAN SOLARCSIQ-0.160.68-900.00%MondayBTO
GALECTIN THERAPGALT-0.13-0.20.00%MondayBTO
LIQTECH INTLLIQT-0.02-0.0125.00%MondayBTO
VASCULAR BIOGNCVBLT-0.17-0.14-11.76%MondayBTO
WIDEOPENWST INCWOW0.09N/AN/AMondayBTO
ASURE SOFTWAREASUR0.110.15-166.67%MondayBTO
CEMTREX NEWCETX0.120.16-60.00%MondayBTO
ENSERVCO CORPENSVN/A-0.06100.00%MondayBTO
JD.COM INC-ADRJD0.02-0.03260.00%MondayBTO
PLYMOUTH IND REPLYM0.29N/AN/AMondayBTO
SORL AUTO PARTSSORL0.330.37140.00%MondayBTO
TECOGEN INCTGEN-0.02-0.02100.00%MondayBTO
URANIUM RES INCURRE-0.13-0.7515.38%MondayBTO
ELEVEN BIOTHERPEBION/A-0.33N/AMondayBTO
TRANSGLOBE ENGYTGA-0.02-0.160.00%MondayBTO
WESTPORT FUELWPRT-0.15-0.420.00%MondayAMC
ATENTO SAATTO0.140.13112.50%MondayAMC
EXTREME NETWRKSEXTR0.120.0760.00%MondayAMC
FATE THERAPEUTCFATE-0.24-0.29-14.29%MondayAMC
SOLARIS OIL INFSOI0.07N/AN/AMondayAMC
ASTERIAS BIOTHRAST-0.18-0.165.56%MondayAMC
CLEAN DIESELCDTI-0.07-0.13-171.43%MondayAMC
CANCER GENETICSCGIX-0.16-0.2838.89%MondayAMC
EVOKE PHARMAEVOK-0.12-0.416.67%MondayAMC
FUSION TELECOMFSNN-0.17-0.24.17%MondayAMC
ATYR PHARMA INCLIFE-0.57-0.65-1.82%MondayAMC
LIMBACH HOLDNGSLMB0.11N/A-900.00%MondayAMC
MARRONE BIO INVMBII-0.21-0.280.00%MondayAMC
ONCOCYTE CORPOCX-0.12-0.1-23.08%MondayAMC
SITO MOBILE LTDSITO-0.020.04-75.00%MondayAMC
TEARLAB CORPTEAR-0.75-1-9.33%MondayAMC
VOXELJET AG-ADRVJET-0.1-0.1-16.67%MondayAMC
ACURA PHARMACTACUR-0.11-0.28127.27%MondayAMC
SPHERE 3D CORPANY-1.5-2.2542.86%MondayAMC
BRIDGELINE DGTLBLIN-0.1-166.67%MondayAMC
BARFRESH FD GRPBRFH-0.02-0.030.00%MondayAMC
CELLECTAR BIOSCCLRBN/A-0.49-115.00%MondayAMC
CELSION CORPCLSN-1.1-2.66-33.33%MondayAMC
CUMULUS MEDIACMLS0.190.08-737.50%MondayAMC
FAMOUS DAVESDAVE0.090.17-150.00%MondayAMC
DIGITAL ALLY INDGLY-0.24-0.540.00%MondayAMC
FLEXIBLE SOLTNSFSI0.030.05180.00%MondayAMC
GALENA BIOPHARMGALE-0.151.259.09%MondayAMC
GREAT ELM CAP CGECC0.2N/AN/AMondayAMC
HILL INTL INCHIL0.010.03-900.00%MondayAMC
HOLLYSYS AUTOMTHOLI0.370.56-33.33%MondayAMC
IMAGEWARE SYSIWSY-0.03-0.03-33.33%MondayAMC
MARATHON PATENTMARA-0.140.4913.33%MondayAMC
NETSHOES CAYMANNETS-0.23N/A80.14%MondayAMC
ONCONOVA THERAPONTX-0.72-1.96N/AMondayAMC
PENGROWTH EGYPGHN/A-0.03300.00%MondayAMC
SABESP -ADRSBS0.250.3352.94%MondayAMC
ONE GROUP HOSPSTKSN/A-0.06-100.00%MondayAMC
INNOVUS PHARMAINNVN/A-0.05N/AMondayAMC
MYOMO INCMYON/AN/AN/AMondayAMC
PARKERVISIONPRKRN/A-0.72N/AMondayAMC
SIERRA METALSSMTSN/AN/AN/AMondayAMC
PHOTRONICS INCPLAB0.090.12-40.00%MondayAMC
FORTUNA SILVERFSM0.040.0450.00%MondayAMC
ROMACO RESOURCSMETC0.05N/A-266.67%MondayAMC
DIGILITI MONEYDGLTN/AN/AN/AMondayAMC
REPROS THERAPEURPRXN/A-0.18N/AMondayN/A
FUJIFILM HLDGSFUJIY0.210.2389.47%MondayN/A
HOME DEPOTHD2.211.973.73%TuesdayBTO
TJX COS INC NEWTJX0.840.843.80%TuesdayBTO
COACH INCCOH0.490.454.55%TuesdayBTO
ADVANCE AUTO PTAAP1.651.9-24.53%TuesdayBTO
EAGLE POINT CRDECC0.510.57-3.70%TuesdayBTO
DICKS SPRTG GDSDKS1.010.820.00%TuesdayBTO
SANCHEZ PRODUCTSNMP-0.44-4.37-85.71%TuesdayBTO
QIWI PLC-ADRQIWI0.240.3354.17%TuesdayBTO
AGILENT TECHA0.520.4920.83%TuesdayAMC
VIAVI SOLUTIONSVIAV0.060.0850.00%TuesdayAMC
JACK HENRY ASSCJKHY0.831.066.94%TuesdayAMC
OBSEVA SAOBSV-0.48N/A-41.46%TuesdayAMC
SOCIAL REALITYSRAXN/A0.316.67%TuesdayAMC
WIDEPOINT CORPWYY-0.01-0.010.00%TuesdayAMC
CATASYS INCCATSN/A-0.54N/ATuesdayAMC
URBAN OUTFITTERURBN0.380.66-18.75%TuesdayAMC
TARGET CORPTGT1.211.2335.96%WednesdayBTO
PERFORMANCE FGPFGC0.50.388.00%WednesdayBTO
POINTER TELOCATPNTR0.20.1838.10%WednesdayBTO
CYREN LTDCYRN-0.05-0.01-20.00%WednesdayBTO
TOP IMAGE SYSTISA-0.080.01-25.00%WednesdayBTO
ITURAN LOCATIONITRNN/A0.36N/AWednesdayBTO
MSG NETWORKSMSGN0.510.57-1.69%WednesdayBTO
ENZYMOTEC LTDENZY0.010.01-100.00%WednesdayBTO
NETAPP INCNTAP0.420.285.88%WednesdayAMC
CISCO SYSTEMSCSCO0.550.581.89%WednesdayAMC
L BRANDS INCLB0.450.713.79%WednesdayAMC
CACI INTL ACACI1.641.7511.03%WednesdayAMC
BRIGGS & STRATTBGG0.510.462.47%WednesdayAMC
SPARTAN NASH COSPTN0.60.583.77%WednesdayAMC
IMMUNOMEDICSIMMU-0.11-0.17-69.23%WednesdayAMC
VIPSHOP HOLDNGSVIPS0.140.13-6.25%WednesdayAMC
GEOPARK LTDGPRK0.04-0.02225.00%WednesdayAMC
WAL-MART STORESWMT1.061.074.17%ThursdayBTO
CHINA LODGINGHTHTN/A0.6750.00%ThursdayBTO
ALIBABA GROUPBABA0.730.52-17.02%ThursdayBTO
SWISSCOM AG ADRSCMWYN/A0.84N/AThursdayBTO
MADISON SQUAR-AMSG-1.1-2.11-54.17%ThursdayBTO
CHINA RAPID FINXRF-0.17N/AN/AThursdayBTO
LANCASTER COLONLANC1.171.12-12.84%ThursdayBTO
STAGE STORESSSI-0.040.0319.12%ThursdayBTO
BUCKLE INCBKE0.220.326.25%ThursdayBTO
LSI INDUSTRIESLYTS0.030.06-75.00%ThursdayBTO
GOLD FIELDS-ADRGFIN/AN/AN/AThursdayBTO
HARMONY GOLDHMYN/AN/AN/AThursdayBTO
GAP INCGPS0.520.624.14%ThursdayAMC
APPLD MATLS INCAMAT0.830.53.95%ThursdayAMC
ROSS STORESROST0.760.713.80%ThursdayAMC
SPORTSMANS WRHSSPWH0.130.2-14.29%ThursdayAMC
ADTELUM GBL EDUATGE0.720.659.38%ThursdayAMC
LATAM AIRLINESLTM-0.03-0.17-21.43%ThursdayAMC
ABSOLUTE SOFTWRALSWF0N/A50.00%ThursdayAMC
ZOES KITCHENZOES0.020.060.00%ThursdayAMC
GLOBANT SAGLOB0.260.250.00%ThursdayAMC
AMERICAS CAR-MTCRMT0.90.8712.50%ThursdayAMC
ESTEE LAUDEREL0.420.4324.66%FridayBTO
DEERE & CODE1.881.5546.47%FridayBTO
ASCENDIS PHARMAASND-0.78-0.6-29.69%FridayBTO
HIBBET SPORTSHIBB-0.20.291.04%FridayBTO
BANCOLOMBIA-ADRCIB11.030.00%FridayAMC
SPARK NEW ZEALDSPKKYN/AN/AN/AFridayN/A


More from Zacks Earnings Preview

You May Like