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Walmart, Target, Home Depot, Macy's and Kohl's are part of Zacks Earnings Preview
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For Immediate Release
Chicago, IL – November 16, 2020 – Zacks.com releases the list of companies likely to issue earnings surprises. This week’s list includes Walmart Inc. (WMT - Free Report) , Target Corporation (TGT - Free Report) , The Home Depot, Inc. (HD - Free Report) , Macy's, Inc. (M - Free Report) and Kohl's Corporation (KSS - Free Report) .
What to Expect from the Retail Sector
The Q3 earnings season has effectively come to an end for most of the major sectors, with the Retail sector as the only one that has a significant number of reports still awaited, particularly from the space’s legacy operators. We will start getting those earnings results this week, with a number of major players like Walmart, Target, and Home Depot on the big box side and Macy’s and Kohl’s on the department store front.
The Retail space had been experiencing a secular transition over the last few years, with consumer dollars steadily shifting to the online medium and traditional malls suffering falling foot traffic. The pandemic accelerated these pre-existing trends, with the digital shift getting a boost. The nature of spending also changed as a result of social distancing and work-from-home mandates.
The traditional department stores with their apparel-centric merchandise and large physical store footprint were dealt a severe blow during the period. The fact that these operators were slow to shift online only added to their woes. It is no surprise that a number of these players have been pushed over the edge by the pandemic. Macy’s and Kohl’s reporting this week are both expected to have lost money in the quarter.
Walmart, Target, and Home Depot that are also reporting this week don’t belong on the ‘victims’ list; they have thrived during this downturn and will likely continue to do so in the coming days.
Walmart shares are up +26.5% this year, handily outperforming the +10.1% gain for the S&P 500 index and -57.5% decline for Macy’s shares. Walmart’s Q3 EPS is expected to be up +1.7% on +3.7% higher revenues. Target shares are up +27.2% this year, with the company expected to report +16.2% higher EPS for Q3 on +11.5% higher revenues.
We typically associate the traditional brick-and-mortar operators as the only ones belonging in the retail space, with the traditional industry/sector classification systems putting those companies either in the Consumer Discretionary sector or in the Consumer Staples sectors. In that system, online vendors get placed in the Technology sector. But we have a stand-alone Retail sector that not only includes the traditional players but also online vendors and restaurant operators.
For the Zacks Retail sector, one of the 16 Zacks sectors, we have already seen Q1 results from 20 of the 34 companies in the S&P 500 index. Most of these Retail sector results that have come out already are from online operators and restaurant players, with the traditional brick-and-mortar players starting to report this week.
Total earnings for these Retail sector companies that have reported already are up +15.1% from the same period last year on +12.1% higher revenues, with 90% beating EPS estimates and an equal proportion beating revenue estimates.
An above-average proportion of retailers have been able to beat estimates thus far. That’s a behavior we have seen across the board from all sectors, with a much higher proportion of companies beating EPS and revenue estimates this earnings season.
With respect to the sector’s Q3 earnings and revenue growth pace (+15.1% earnings growth on +12.1% revenue growth), the picture changes meaningfully once Amazon’s results are removed from the sector’s aggregated reported numbers.
The online vendor accounts for roughly 42% of the sector’s total market capitalization in the S&P 500 index and accounts for 37.3% of the sector’s total earnings that have come out already. We know that Amazon’s Q3 earnings were up +196.7% on +37.4% higher revenues.
Excluding contribution from Amazon, the Zacks Retail sector’s Q3 earnings would actually be down -15.7% on +2.9% higher revenues.
For Q3 as a whole for the sector, combining the results that have come out with estimates for the still-to-come companies, total earnings are expected to be down +11.9% from the same period last year on +9.4% higher revenues. Excluding Amazon, the sector’s Q3 earnings would be down -4.9% on +5.1% higher revenues.
Q3 Earnings Season Scorecard (as of Friday, November 13th)
We now have Q3 results from 463 S&P 500 members or 92.6% of the index’s total membership. Total earnings (or aggregate net income) for these 463 companies are down -9% from the same period last year on -2% lower revenues, with 84.4% beating EPS estimates and 75.8% beating revenue estimates.
Not only is the pace of declines decelerating, but also a much bigger proportion of companies are beating EPS and revenue estimates.
The reporting cycle slows down in a notable way going forward, with this week bringing in more than 200 companies to report Q3 results, including 12 S&P 500 members.
Looking at Q3 as a whole, combining the actual results that have come out with estimates for the still-to-come companies, total earnings for the index are expected to be down -8.6% on -1.2% lower revenues.
The key factor from the market’s standpoint is how estimates for 2020 Q4 evolve as we go through the remainder of the Q3 reporting cycle. The trend thus far is positive.
The annual growth picture approximates to an index ‘EPS’ of $132.28 for 2020, down from $160.04 in 2019 and $161.14 in 2021.
For an in-depth look at the overall earnings picture and expectations for the coming quarters, please check out our weekly Earnings Trends report >>>> Handicapping the Improving Earnings Picture
Looking for Stocks with Skyrocketing Upside?
Zacks has just released a Special Report on the booming investment opportunities of legal marijuana.
Ignited by referendums and legislation, this industry is expected to blast from an already robust $17.7 billion in 2019 to a staggering $73.6 billion by 2027. Early investors stand to make a killing, but you have to be ready to act and know just where to look.
Zacks Investment Research is under common control with affiliated entities (including a broker-dealer and an investment adviser), which may engage in transactions involving the foregoing securities for the clients of such affiliates.
Zacks.com provides investment resources and informs you of these resources, which you may choose to use in making your own investment decisions. Zacks is providing information on this resource to you subject to the Zacks "Terms and Conditions of Service" disclaimer. www.zacks.com/disclaimer.
Past performance is no guarantee of future results. Inherent in any investment is the potential for loss.This material is being provided for informational purposes only and nothing herein constitutes investment, legal, accounting or tax advice, or a recommendation to buy, sell or hold a security. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. It should not be assumed that any investments in securities, companies, sectors or markets identified and described were or will be profitable. All information is current as of the date of herein and is subject to change without notice. Any views or opinions expressed may not reflect those of the firm as a whole. Zacks Investment Research does not engage in investment banking, market making or asset management activities of any securities. These returns are from hypothetical portfolios consisting of stocks with Zacks Rank = 1 that were rebalanced monthly with zero transaction costs. These are not the returns of actual portfolios of stocks. The S&P 500 is an unmanaged index. Visit https://www.zacks.com/performance for information about the performance numbers displayed in this press release.
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Walmart, Target, Home Depot, Macy's and Kohl's are part of Zacks Earnings Preview
For Immediate Release
Chicago, IL – November 16, 2020 – Zacks.com releases the list of companies likely to issue earnings surprises. This week’s list includes Walmart Inc. (WMT - Free Report) , Target Corporation (TGT - Free Report) , The Home Depot, Inc. (HD - Free Report) , Macy's, Inc. (M - Free Report) and Kohl's Corporation (KSS - Free Report) .
What to Expect from the Retail Sector
The Q3 earnings season has effectively come to an end for most of the major sectors, with the Retail sector as the only one that has a significant number of reports still awaited, particularly from the space’s legacy operators. We will start getting those earnings results this week, with a number of major players like Walmart, Target, and Home Depot on the big box side and Macy’s and Kohl’s on the department store front.
The Retail space had been experiencing a secular transition over the last few years, with consumer dollars steadily shifting to the online medium and traditional malls suffering falling foot traffic. The pandemic accelerated these pre-existing trends, with the digital shift getting a boost. The nature of spending also changed as a result of social distancing and work-from-home mandates.
The traditional department stores with their apparel-centric merchandise and large physical store footprint were dealt a severe blow during the period. The fact that these operators were slow to shift online only added to their woes. It is no surprise that a number of these players have been pushed over the edge by the pandemic. Macy’s and Kohl’s reporting this week are both expected to have lost money in the quarter.
Walmart, Target, and Home Depot that are also reporting this week don’t belong on the ‘victims’ list; they have thrived during this downturn and will likely continue to do so in the coming days.
Walmart shares are up +26.5% this year, handily outperforming the +10.1% gain for the S&P 500 index and -57.5% decline for Macy’s shares. Walmart’s Q3 EPS is expected to be up +1.7% on +3.7% higher revenues. Target shares are up +27.2% this year, with the company expected to report +16.2% higher EPS for Q3 on +11.5% higher revenues.
We typically associate the traditional brick-and-mortar operators as the only ones belonging in the retail space, with the traditional industry/sector classification systems putting those companies either in the Consumer Discretionary sector or in the Consumer Staples sectors. In that system, online vendors get placed in the Technology sector. But we have a stand-alone Retail sector that not only includes the traditional players but also online vendors and restaurant operators.
For the Zacks Retail sector, one of the 16 Zacks sectors, we have already seen Q1 results from 20 of the 34 companies in the S&P 500 index. Most of these Retail sector results that have come out already are from online operators and restaurant players, with the traditional brick-and-mortar players starting to report this week.
Total earnings for these Retail sector companies that have reported already are up +15.1% from the same period last year on +12.1% higher revenues, with 90% beating EPS estimates and an equal proportion beating revenue estimates.
An above-average proportion of retailers have been able to beat estimates thus far. That’s a behavior we have seen across the board from all sectors, with a much higher proportion of companies beating EPS and revenue estimates this earnings season.
With respect to the sector’s Q3 earnings and revenue growth pace (+15.1% earnings growth on +12.1% revenue growth), the picture changes meaningfully once Amazon’s results are removed from the sector’s aggregated reported numbers.
The online vendor accounts for roughly 42% of the sector’s total market capitalization in the S&P 500 index and accounts for 37.3% of the sector’s total earnings that have come out already. We know that Amazon’s Q3 earnings were up +196.7% on +37.4% higher revenues.
Excluding contribution from Amazon, the Zacks Retail sector’s Q3 earnings would actually be down -15.7% on +2.9% higher revenues.
For Q3 as a whole for the sector, combining the results that have come out with estimates for the still-to-come companies, total earnings are expected to be down +11.9% from the same period last year on +9.4% higher revenues. Excluding Amazon, the sector’s Q3 earnings would be down -4.9% on +5.1% higher revenues.
Q3 Earnings Season Scorecard (as of Friday, November 13th)
We now have Q3 results from 463 S&P 500 members or 92.6% of the index’s total membership. Total earnings (or aggregate net income) for these 463 companies are down -9% from the same period last year on -2% lower revenues, with 84.4% beating EPS estimates and 75.8% beating revenue estimates.
Not only is the pace of declines decelerating, but also a much bigger proportion of companies are beating EPS and revenue estimates.
The reporting cycle slows down in a notable way going forward, with this week bringing in more than 200 companies to report Q3 results, including 12 S&P 500 members.
Looking at Q3 as a whole, combining the actual results that have come out with estimates for the still-to-come companies, total earnings for the index are expected to be down -8.6% on -1.2% lower revenues.
The key factor from the market’s standpoint is how estimates for 2020 Q4 evolve as we go through the remainder of the Q3 reporting cycle. The trend thus far is positive.
The annual growth picture approximates to an index ‘EPS’ of $132.28 for 2020, down from $160.04 in 2019 and $161.14 in 2021.
For an in-depth look at the overall earnings picture and expectations for the coming quarters, please check out our weekly Earnings Trends report >>>> Handicapping the Improving Earnings Picture
Looking for Stocks with Skyrocketing Upside?
Zacks has just released a Special Report on the booming investment opportunities of legal marijuana.
Ignited by referendums and legislation, this industry is expected to blast from an already robust $17.7 billion in 2019 to a staggering $73.6 billion by 2027. Early investors stand to make a killing, but you have to be ready to act and know just where to look.
See the pot stocks we're targeting >>
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Zacks.com provides investment resources and informs you of these resources, which you may choose to use in making your own investment decisions. Zacks is providing information on this resource to you subject to the Zacks "Terms and Conditions of Service" disclaimer. www.zacks.com/disclaimer.
Past performance is no guarantee of future results. Inherent in any investment is the potential for loss.This material is being provided for informational purposes only and nothing herein constitutes investment, legal, accounting or tax advice, or a recommendation to buy, sell or hold a security. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. It should not be assumed that any investments in securities, companies, sectors or markets identified and described were or will be profitable. All information is current as of the date of herein and is subject to change without notice. Any views or opinions expressed may not reflect those of the firm as a whole. Zacks Investment Research does not engage in investment banking, market making or asset management activities of any securities. These returns are from hypothetical portfolios consisting of stocks with Zacks Rank = 1 that were rebalanced monthly with zero transaction costs. These are not the returns of actual portfolios of stocks. The S&P 500 is an unmanaged index. Visit https://www.zacks.com/performance for information about the performance numbers displayed in this press release.