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Retailer Earnings Paint Cloudy Economic Picture: Stocks to Watch
The third-quarter earnings season is winding down, and while all eyes remain on Nvidia ahead of this evening’s report, it’s a huge week on the retail front.
Two of the largest home improvement retailers in Home Depot and Lowe’s reported fiscal third-quarter results this week, delivering mixed performances amid softer-than-anticipated demand.
The big-box retail weakness appears to have been widespread during the quarter, with Target’s recent downturn continuing amid cautious consumer spending. The results reinforce a narrative of stagnation amid macro uncertainty given a weakening employment outlook and high-interest-rate backdrop.
Home Depot, Lowe’s Deliver Mixed Results
Home Depot reported its fiscal third-quarter results yesterday morning, posting a mediocre performance that fell short of analyst expectations on profitability amid softer-than-anticipated demand.
Adjusted earnings per share came in at $3.74, missing the expected $3.81 by 1.84% and declining from $3.78 in the prior-year quarter. The miss marked the third such occurrence in as many earnings releases, which speaks to the relatively difficult operating environment in the home improvement sector. The shortfall was attributed to fewer major storms impacting sales in repair categories and heightened consumer caution.
The company posted sales of $41.4 billion, up 2.8% year-over-year and surpassing the Zacks Consensus Estimate by 0.88%, with approximately $900 million contributed by the recent GMS acquisition over eight weeks.
Comparable sales growth was a key disappointment, rising only 0.2% globally, well below our pre-earnings projections of 2.1%. Customer transactions declined 1.4% from the prior quarter, reflecting reduced foot traffic and project deferrals. But average ticket increased 2% to $90.39, driven by higher prices in core categories like building materials.
The company lowered its full-year 2025 adjusted earnings forecast, reflecting persistent headwinds from consumer uncertainty and weaker housing turnover. Home Depot (HD - Free Report) shares shed 7% of their value following the announcement and are trading near year-to-date lows:
Image Source: StockCharts
Meanwhile, Lowe's reported its fiscal third-quarter results this morning, delivering a performance that exceeded expectations on profitability while aligning closely with revenue forecasts in a persistently challenging environment.
The home improvement retailer achieved total sales of $20.8 billion, up 3.2% year-over-year and mainly in line with our estimates, with notable contributions from strategic acquisitions.
Resuming its long history of surpassing EPS estimates, Lowe’s Q3 adjusted earnings per share reached $3.06, surpassing the anticipated $2.97 by 3% and reflecting a 5.9% increase from the prior year. The results were driven by operational efficiencies and a focus on higher-margin professional segments.
Comparable sales (+0.4%) rose for a second consecutive quarter, supported by an 11.4% increase in online sales and strength in categories like building materials and tools for professionals.
These results suggest Lowe's (LOW - Free Report) is better positioned for a gradual recovery than initially feared, with the Pro segment providing a key differentiator and buffer against DIY weakness, potentially driving market share gains. LOW stock was up better than 5% in early trading Wednesday.
Image Source: StockCharts
Target’s Troubles Linger, Walmart on Deck
Discount retailer Target (TGT - Free Report) cut its full-year profit guidance on Wednesday, warning of a tepid holiday season as budget-conscious consumers prioritize essential goods like food and household items.
The company saw its sales decline 1.5% year-over-year to $25.3 billion, which also fell short of our $25.36 billion estimate. Comparable sales decreased 2.7% following a 1.9% decline in the prior quarter. This metric fared far worse than our estimate of a 1.4% decline.
While Target’s earnings of $1.78 per share came in slightly ahead of estimates, the company’s bottom line declined 3.8% from the year-ago period. The number of transactions declined year-over-year as well, reinforcing a theme of overall cautious spending.
Target’s stock remains in a downtrend and was trading slightly lower Wednesday morning:
Image Source: StockCharts
Rival Walmart is scheduled to report its fiscal third-quarter earnings on Thursday morning. The company is coming off of its first quarterly EPS miss in several years. Still, the Bentonville-based retailer delivered a 2.8% trailing four-quarter average earnings surprise, highlighting management’s ability to execute despite significant headwinds.
Walmart (WMT - Free Report) is projected to deliver earnings per share of $0.61, representing a 5.2% increase from the year-ago quarter. Estimates have increased slightly (+1.67%) over the past week. Revenue is expected to reach $177.14 billion, up 4.5% year-over-year, supported by contributions from its U.S., International, and Sam's Club segments. But this week’s results from the retail sector may spill over into the retail giant’s quarterly performance.
Bottom Line
The market is experiencing its first legitimate pullback since the April lows. The relatively weak results out of the retail sector certainly aren’t aiding the bulls.
Strong reports over the next few days out of big box retailer Walmart and leading semiconductor company Nvidia could be exactly what the market needs to stabilize and kickstart the next leg higher.
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Retailer Earnings Paint Cloudy Economic Picture: Stocks to Watch
The third-quarter earnings season is winding down, and while all eyes remain on Nvidia ahead of this evening’s report, it’s a huge week on the retail front.
Two of the largest home improvement retailers in Home Depot and Lowe’s reported fiscal third-quarter results this week, delivering mixed performances amid softer-than-anticipated demand.
The big-box retail weakness appears to have been widespread during the quarter, with Target’s recent downturn continuing amid cautious consumer spending. The results reinforce a narrative of stagnation amid macro uncertainty given a weakening employment outlook and high-interest-rate backdrop.
Home Depot, Lowe’s Deliver Mixed Results
Home Depot reported its fiscal third-quarter results yesterday morning, posting a mediocre performance that fell short of analyst expectations on profitability amid softer-than-anticipated demand.
Adjusted earnings per share came in at $3.74, missing the expected $3.81 by 1.84% and declining from $3.78 in the prior-year quarter. The miss marked the third such occurrence in as many earnings releases, which speaks to the relatively difficult operating environment in the home improvement sector. The shortfall was attributed to fewer major storms impacting sales in repair categories and heightened consumer caution.
The company posted sales of $41.4 billion, up 2.8% year-over-year and surpassing the Zacks Consensus Estimate by 0.88%, with approximately $900 million contributed by the recent GMS acquisition over eight weeks.
Comparable sales growth was a key disappointment, rising only 0.2% globally, well below our pre-earnings projections of 2.1%. Customer transactions declined 1.4% from the prior quarter, reflecting reduced foot traffic and project deferrals. But average ticket increased 2% to $90.39, driven by higher prices in core categories like building materials.
The company lowered its full-year 2025 adjusted earnings forecast, reflecting persistent headwinds from consumer uncertainty and weaker housing turnover. Home Depot (HD - Free Report) shares shed 7% of their value following the announcement and are trading near year-to-date lows:
Image Source: StockCharts
Meanwhile, Lowe's reported its fiscal third-quarter results this morning, delivering a performance that exceeded expectations on profitability while aligning closely with revenue forecasts in a persistently challenging environment.
The home improvement retailer achieved total sales of $20.8 billion, up 3.2% year-over-year and mainly in line with our estimates, with notable contributions from strategic acquisitions.
Resuming its long history of surpassing EPS estimates, Lowe’s Q3 adjusted earnings per share reached $3.06, surpassing the anticipated $2.97 by 3% and reflecting a 5.9% increase from the prior year. The results were driven by operational efficiencies and a focus on higher-margin professional segments.
Comparable sales (+0.4%) rose for a second consecutive quarter, supported by an 11.4% increase in online sales and strength in categories like building materials and tools for professionals.
These results suggest Lowe's (LOW - Free Report) is better positioned for a gradual recovery than initially feared, with the Pro segment providing a key differentiator and buffer against DIY weakness, potentially driving market share gains. LOW stock was up better than 5% in early trading Wednesday.
Image Source: StockCharts
Target’s Troubles Linger, Walmart on Deck
Discount retailer Target (TGT - Free Report) cut its full-year profit guidance on Wednesday, warning of a tepid holiday season as budget-conscious consumers prioritize essential goods like food and household items.
The company saw its sales decline 1.5% year-over-year to $25.3 billion, which also fell short of our $25.36 billion estimate. Comparable sales decreased 2.7% following a 1.9% decline in the prior quarter. This metric fared far worse than our estimate of a 1.4% decline.
While Target’s earnings of $1.78 per share came in slightly ahead of estimates, the company’s bottom line declined 3.8% from the year-ago period. The number of transactions declined year-over-year as well, reinforcing a theme of overall cautious spending.
Target’s stock remains in a downtrend and was trading slightly lower Wednesday morning:
Image Source: StockCharts
Rival Walmart is scheduled to report its fiscal third-quarter earnings on Thursday morning. The company is coming off of its first quarterly EPS miss in several years. Still, the Bentonville-based retailer delivered a 2.8% trailing four-quarter average earnings surprise, highlighting management’s ability to execute despite significant headwinds.
Walmart (WMT - Free Report) is projected to deliver earnings per share of $0.61, representing a 5.2% increase from the year-ago quarter. Estimates have increased slightly (+1.67%) over the past week. Revenue is expected to reach $177.14 billion, up 4.5% year-over-year, supported by contributions from its U.S., International, and Sam's Club segments. But this week’s results from the retail sector may spill over into the retail giant’s quarterly performance.
Bottom Line
The market is experiencing its first legitimate pullback since the April lows. The relatively weak results out of the retail sector certainly aren’t aiding the bulls.
Strong reports over the next few days out of big box retailer Walmart and leading semiconductor company Nvidia could be exactly what the market needs to stabilize and kickstart the next leg higher.