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5 Retailers Poised to Trump Estimates This Earnings Season
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Though the earnings season has reached its tail end, the main chunk of releases from the Retail-Wholesale sector is yet to come. The surge in COVID-19 cases, reimposition of lockdowns in some states and fading of the initial COVID-19 relief package did raise concern about how comfortable consumers would be in terms of purchasing. However, Americans showed resilience.
Notably, the last-minute deal on $900 billion pandemic-relief package, ease in restrictions on business activities, and increased distribution of vaccines helped lift consumer sentiment. Undeniably, stimulus checks of $600 to individuals boosted spending power. Per the Commerce Department, U.S. retail sales increased 5.3% sequentially and 7.4% year over year in January 2021. Sales during November through January period rose 4.6% year over year.
Industry experts also pointed that consumers have been cutting expenditures on pandemic-sensitive services such as travel, entertainment or outdoor dining, and redirecting the same to retail space. They even might have been tapping their savings that helped boost consumption activity. We note that customers have been consolidating their trips and majorly shopping at big-box stores that provide differentiated product range under one roof.
Keeping consumers’ product preferences and growing inclination toward online shopping in mind, retailers have been replenishing shelves with in-demand merchandise and ramping up investments in digitization. To beat the COVID-19 blues, companies have been directing resources toward advancing omni-channel capabilities, enhancing supply chain and providing faster delivery options, be it curbside pickup or delivery at home, in order to better engage with customers.
Clearly, the aforementioned factors raise optimism about the outcome of the results. However, margins remain an area to watch. Impact of investments to increase teams’ pay and benefits, and expenses on additional safety and cleansing measures due to the coronavirus pandemic, on margins cannot be ruled out. Apart from these, any deleverage in SG&A rate, higher labor and occupancy costs, and increased marketing and other store-related expenses might have put more pressure on margins.
Earnings Picture
Per the latest Zacks Earnings Preview, the Retail-Wholesale sector is anticipated to witness top-line growth of 12.4%, following an increase of 11.2% in the preceding season. Again, the bottom line is expected to jump 11.1% this earnings season, following a 21.3% growth in the last reporting cycle.
Big-box retailers such as Walmart Inc. (WMT - Free Report) and The Home Depot, Inc. (HD - Free Report) benefited from consumers’ shift in buying behavior and spending pattern due to the pandemic. We note that Walmart U.S. fourth-quarter fiscal 2021 comp sales grew 8.6%, while U.S. e-commerce sales surged 69%. The Home Depot’s comparable sales increased 24.5% in the final quarter of fiscal 2020. Sales leverage in digital platforms soared roughly 83%.
Making the Perfect Choice
Our research shows that for stocks with the combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold), the chance of a positive earnings surprise is as high as 70%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
5 Prominent Picks
Target Corporation (TGT - Free Report) , with a Zacks Rank #2 and an Earnings ESP of +8.17%, is a solid bet. The Zacks Consensus Estimate for its fourth-quarter fiscal 2020 earnings is pegged at $2.47, suggesting growth of 46.2% from the prior-year quarter. Also, the consensus estimate for earnings has moved up 1.6% in the past 30 days. This general merchandise retailer has a trailing four-quarter earnings surprise of 52.4%, on average. The company is slated to announce results on Mar 2. You can see the complete list of today’s Zacks #1 Rank stocks here.
Target Corporation Price, Consensus and EPS Surprise
You may consider Dollar Tree, Inc. (DLTR - Free Report) , which operates discount variety retail stores. The stock has a Zacks Rank #2 and an Earnings ESP of +1.94%. The Zacks Consensus Estimate for its fourth-quarter fiscal 2020 earnings is pegged at $2.12, which suggests an improvement of 18.4% from the prior-year quarter. Also, the Zacks Consensus Estimate for its quarterly earnings has moved up by a penny in the past seven days. The company has a trailing four-quarter earnings surprise of 17.1%, on average. The company is scheduled to report results on Mar 3.
Dollar Tree, Inc. Price, Consensus and EPS Surprise
DICK'S Sporting Goods, Inc. (DKS - Free Report) also deserves a mention. The stock has a Zacks Rank #2 and an Earnings ESP of +3.93%. The Zacks Consensus Estimate for its fourth-quarter fiscal 2020 earnings is pegged at $2.21, indicating an improvement from $1.32 reported in the prior-year quarter. Also, the consensus estimate for earnings has increased by a couple of cents in the past seven days. Notably, this omni-channel sporting goods retailer has a trailing four-quarter earnings surprise of 34.7%, on average. The company is scheduled to report results on Mar 9.
DICKS Sporting Goods, Inc. Price, Consensus and EPS Surprise
Dollar General Corporation (DG - Free Report) , with a Zacks Rank #3 and an Earnings ESP of +1.11%, is also worth betting on. The Zacks Consensus Estimate for its fourth-quarter fiscal 2020 earnings is pegged at $2.69, suggesting growth of 28.1% from the prior-year quarter. Also, the consensus estimate for earnings has increased by a penny over the past seven days. This discount retailer has a trailing four-quarter earnings surprise of 24.6%, on average. The company is scheduled to report results on Mar 18.
Dollar General Corporation Price, Consensus and EPS Surprise
Investors can even count on Costco Wholesale Corporation (COST - Free Report) , an operator of membership warehouses, with a Zacks Rank #3 and an Earnings ESP of +2.43%. The Zacks Consensus Estimate for its second-quarter fiscal 2021 earnings is pegged at $2.41, indicating an improvement of 14.8% from the year-ago period. Also, the Zacks Consensus Estimate for quarterly earnings has risen by a penny in the past seven days. The company has a trailing four-quarter earnings surprise of 5.5%, on average. The company is slated to announce results on Mar 4.
Costco Wholesale Corporation Price, Consensus and EPS Surprise
Be among the early investors in the new type of device that experts say could impact society as much as the discovery of electricity. Current technology will soon be outdated and replaced by these new devices. In the process, it’s expected to create 22 million jobs and generate $12.3 trillion in activity.
A select few stocks could skyrocket the most as rollout accelerates for this new tech. Early investors could see gains similar to buying Microsoft in the 1990s. Zacks’ just-released special report reveals 8 stocks to watch. The report is only available for a limited time.
Image: Bigstock
5 Retailers Poised to Trump Estimates This Earnings Season
Though the earnings season has reached its tail end, the main chunk of releases from the Retail-Wholesale sector is yet to come. The surge in COVID-19 cases, reimposition of lockdowns in some states and fading of the initial COVID-19 relief package did raise concern about how comfortable consumers would be in terms of purchasing. However, Americans showed resilience.
Notably, the last-minute deal on $900 billion pandemic-relief package, ease in restrictions on business activities, and increased distribution of vaccines helped lift consumer sentiment. Undeniably, stimulus checks of $600 to individuals boosted spending power. Per the Commerce Department, U.S. retail sales increased 5.3% sequentially and 7.4% year over year in January 2021. Sales during November through January period rose 4.6% year over year.
Industry experts also pointed that consumers have been cutting expenditures on pandemic-sensitive services such as travel, entertainment or outdoor dining, and redirecting the same to retail space. They even might have been tapping their savings that helped boost consumption activity. We note that customers have been consolidating their trips and majorly shopping at big-box stores that provide differentiated product range under one roof.
Keeping consumers’ product preferences and growing inclination toward online shopping in mind, retailers have been replenishing shelves with in-demand merchandise and ramping up investments in digitization. To beat the COVID-19 blues, companies have been directing resources toward advancing omni-channel capabilities, enhancing supply chain and providing faster delivery options, be it curbside pickup or delivery at home, in order to better engage with customers.
Clearly, the aforementioned factors raise optimism about the outcome of the results. However, margins remain an area to watch. Impact of investments to increase teams’ pay and benefits, and expenses on additional safety and cleansing measures due to the coronavirus pandemic, on margins cannot be ruled out. Apart from these, any deleverage in SG&A rate, higher labor and occupancy costs, and increased marketing and other store-related expenses might have put more pressure on margins.
Earnings Picture
Per the latest Zacks Earnings Preview, the Retail-Wholesale sector is anticipated to witness top-line growth of 12.4%, following an increase of 11.2% in the preceding season. Again, the bottom line is expected to jump 11.1% this earnings season, following a 21.3% growth in the last reporting cycle.
Big-box retailers such as Walmart Inc. (WMT - Free Report) and The Home Depot, Inc. (HD - Free Report) benefited from consumers’ shift in buying behavior and spending pattern due to the pandemic. We note that Walmart U.S. fourth-quarter fiscal 2021 comp sales grew 8.6%, while U.S. e-commerce sales surged 69%. The Home Depot’s comparable sales increased 24.5% in the final quarter of fiscal 2020. Sales leverage in digital platforms soared roughly 83%.
Making the Perfect Choice
Our research shows that for stocks with the combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold), the chance of a positive earnings surprise is as high as 70%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
5 Prominent Picks
Target Corporation (TGT - Free Report) , with a Zacks Rank #2 and an Earnings ESP of +8.17%, is a solid bet. The Zacks Consensus Estimate for its fourth-quarter fiscal 2020 earnings is pegged at $2.47, suggesting growth of 46.2% from the prior-year quarter. Also, the consensus estimate for earnings has moved up 1.6% in the past 30 days. This general merchandise retailer has a trailing four-quarter earnings surprise of 52.4%, on average. The company is slated to announce results on Mar 2. You can see the complete list of today’s Zacks #1 Rank stocks here.
Target Corporation Price, Consensus and EPS Surprise
Target Corporation price-consensus-eps-surprise-chart | Target Corporation Quote
You may consider Dollar Tree, Inc. (DLTR - Free Report) , which operates discount variety retail stores. The stock has a Zacks Rank #2 and an Earnings ESP of +1.94%. The Zacks Consensus Estimate for its fourth-quarter fiscal 2020 earnings is pegged at $2.12, which suggests an improvement of 18.4% from the prior-year quarter. Also, the Zacks Consensus Estimate for its quarterly earnings has moved up by a penny in the past seven days. The company has a trailing four-quarter earnings surprise of 17.1%, on average. The company is scheduled to report results on Mar 3.
Dollar Tree, Inc. Price, Consensus and EPS Surprise
Dollar Tree, Inc. price-consensus-eps-surprise-chart | Dollar Tree, Inc. Quote
DICK'S Sporting Goods, Inc. (DKS - Free Report) also deserves a mention. The stock has a Zacks Rank #2 and an Earnings ESP of +3.93%. The Zacks Consensus Estimate for its fourth-quarter fiscal 2020 earnings is pegged at $2.21, indicating an improvement from $1.32 reported in the prior-year quarter. Also, the consensus estimate for earnings has increased by a couple of cents in the past seven days. Notably, this omni-channel sporting goods retailer has a trailing four-quarter earnings surprise of 34.7%, on average. The company is scheduled to report results on Mar 9.
DICKS Sporting Goods, Inc. Price, Consensus and EPS Surprise
DICKS Sporting Goods, Inc. price-consensus-eps-surprise-chart | DICKS Sporting Goods, Inc. Quote
Dollar General Corporation (DG - Free Report) , with a Zacks Rank #3 and an Earnings ESP of +1.11%, is also worth betting on. The Zacks Consensus Estimate for its fourth-quarter fiscal 2020 earnings is pegged at $2.69, suggesting growth of 28.1% from the prior-year quarter. Also, the consensus estimate for earnings has increased by a penny over the past seven days. This discount retailer has a trailing four-quarter earnings surprise of 24.6%, on average. The company is scheduled to report results on Mar 18.
Dollar General Corporation Price, Consensus and EPS Surprise
Dollar General Corporation price-consensus-eps-surprise-chart | Dollar General Corporation Quote
Investors can even count on Costco Wholesale Corporation (COST - Free Report) , an operator of membership warehouses, with a Zacks Rank #3 and an Earnings ESP of +2.43%. The Zacks Consensus Estimate for its second-quarter fiscal 2021 earnings is pegged at $2.41, indicating an improvement of 14.8% from the year-ago period. Also, the Zacks Consensus Estimate for quarterly earnings has risen by a penny in the past seven days. The company has a trailing four-quarter earnings surprise of 5.5%, on average. The company is slated to announce results on Mar 4.
Costco Wholesale Corporation Price, Consensus and EPS Surprise
Costco Wholesale Corporation price-consensus-eps-surprise-chart | Costco Wholesale Corporation Quote
Biggest Tech Breakthrough in a Generation
Be among the early investors in the new type of device that experts say could impact society as much as the discovery of electricity. Current technology will soon be outdated and replaced by these new devices. In the process, it’s expected to create 22 million jobs and generate $12.3 trillion in activity.
A select few stocks could skyrocket the most as rollout accelerates for this new tech. Early investors could see gains similar to buying Microsoft in the 1990s. Zacks’ just-released special report reveals 8 stocks to watch. The report is only available for a limited time.
See 8 breakthrough stocks now>>