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5 Retail Bigwigs Likely to Gain on Earnings Next Week
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We are in the last leg of the second-quarter 2021 earnings season. So far, results are highly impressive with all-round strength. Aggregate earnings of the market's benchmark — the S&P 500 Index — are on track to register a new all-time high with significant momentum on the revenue front.
Most of the companies of the major sectors and industries have already reported their quarterly results. The notable exception is the retail sector as several retail behemoths are slated to report their earnings results next week.
Retail Sector Q2 Performance in a Nutshell
Last quarter was a mixed one for the retail sector. Retail sales increased 0.9% in April followed by a significant decline of 1.7% in May. However, the sector returned to the positive territory in June as sales rose 0.6%. Core retail sales (excluding the volatile auto sales) remained flat in April with the previous month. However, the metric declined 0.9% in May followed by a strong recovery of 1.3% gain in June.
Retail sales in April and May were dented by a major spike in the general price level and investors' concern that the Fed may be compelled to start tapering its existing $120 billion per month bond-buying program. A reduction in the quantitative easing program will raise the market's risk-free interest rate.
The core PCE price index, core consumer price index and producer price index jumped to more than a decade high. Moreover, the resurgence of the highly-infectious Delta string of coronavirus in several U.S. states shook market participants' confidence.
Robust Q2 Earnings Results
As of Aug 11, 454 companies of the S&P 500 Index reported results. Total earnings of these companies jumped 102.8% year over year on 27.5% higher revenues. Moreover, 87% of these companies beat their earnings per share (EPS) estimates and a record 86.6% surpassed revenue estimates.
For the second quarter as a whole, total earnings of the S&P 500 Index are expected to be up 92.5% year over year on 24.8% higher revenues. This indicates a massive improvement over the initial projection of EPS increasing 62.2% from the same period last year on 18.2% higher revenues.
These estimates are impressive primarily because second-quarter 2020 witnessed a lockdown owing to the global outbreak of the deadly coronavirus. Notwithstanding favorable comparisons with last year, second-quarter 2021 earnings estimates indicate more than 25% growth from the pre-pandemic second quarter of 2019.
More importantly, earnings expectations are increasing for the quarters yet to be reported. For example, expectations for aggregate earnings of the S&P 500 Index for third-quarter 2021 increased steadily from 13.5% on Jan 6 to 26.2% on Aug 11.
As of Aug 11, total 2021 earnings of the S&P 500 Index were projected to climb 41.9% on 12.7% higher revenues. For 2022 and 2023, S&P 500's total earnings like to grow 9.4% and 10.2% on 6.6% and 4.8% higher revenues, respectively.
Our research shows that for stocks with the combination of a Zacks Rank #3 or better and a positive Earnings ESP, the chance of an earnings beat is as high as 70%. These stocks are anticipated to appreciate after earnings releases. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
The chart below shows the price performance of five stocks mentioned below in the last quarter.
Image Source: Zacks Investment Research
Walmart Inc. (WMT - Free Report) has been gaining from its sturdy comparable store sales record, which in turn is driven by its constant expansion efforts and splendid e-commerce performance. Walmart has been undertaking several efforts to enhance merchandise assortments. Also, the company has been focused on store remodeling stores, in an attempt to upgrade them with advanced in-store and digital innovations.
The company has an Earnings ESP of +1.14%. It has an expected earnings growth rate of 9.1% for the current year (ending January 2022). The Zacks Consensus Estimate for current-year earnings improved 0.3% over the last 7 days.
Walmart recorded earnings surprises in three out of the last four quarters, with an average beat of 17.8%. This Zacks Rank #2 company is set to release second-quarter fiscal 2022 earnings results on Aug 17, before the opening bell.
The Home Depot Inc. (HD - Free Report) is witnessing significant benefits from the execution of the “One Home Depot” investment plan, which focuses on expanding supply chain facilities, technology investments and enhancement to the digital experience. Amid the pandemic, customers have been increasingly blending the physical and digital elements of the shopping experience, making the interconnected One Home Depot strategy most relevant.
The company has an Earnings ESP of +1.24%. It has an expected earnings growth rate of 17.5% for the current year (ending January 2022). The Zacks Consensus Estimate for current-year earnings improved 0.3% over the last 7 days.
Home Depot recorded earnings surprises in the last four reported quarters, with an average beat of 9.9%. This Zacks Rank #3 company is set to release second-quarter fiscal 2021 earnings results on Aug 17, before the opening bell.
Lowe's Companies Inc. (LOW - Free Report) remains well positioned to capitalize on the demand in the home improvement market backed by investments in technology, merchandise category and strength in Pro business. Its new total home strategy that includes providing complete solutions for various types of home repair and improvement needs bodes well. The strategy is an extension of the company’s retail-fundamentals approach.
The company has an Earnings ESP of +0.85%. It has an expected earnings growth rate of 23.1% for the current year (ending January 2022). The Zacks Consensus Estimate for current-year earnings improved 0.3% over the last 7 days.
Lowe's Companies recorded earnings surprises in the last four reported quarters, with an average beat of 14.4%. This Zacks Rank #3 company is set to release second-quarter fiscal 2021 earnings results on Aug 18, before the opening bell.
The TJX Companies Inc. (TJX - Free Report) has been benefiting from its solid store and e-commerce growth efforts. It regularly opens stores and expands fast across the United States, Europe, Canada and Australia. With an increasing number of consumers resorting to online shopping, the company has undertaken several initiatives to boost online sales and strengthen its e-commerce business.
The company has an Earnings ESP of +4.06%. It has an expected earnings growth rate of more than 100% for the current year (ending January 2022). The Zacks Consensus Estimate for current-year earnings improved 0.4% over the last 7 days. This Zacks Rank #2 company is set to release second-quarter fiscal 2021 earnings results on Aug 18, before the opening bell.
Target Corp. (TGT - Free Report) operates as a general merchandise retailer in the United States. It has undertaken several strategic initiatives to boost its performance. The increase in sales was led by the Apparel, Home, Hardlines, Beauty, Essentials and Food & Beverage categories. Target continues to lay emphasis on developing flexible format stores to penetrate deeper into urban and suburban areas.
The company has an Earnings ESP of +4.93%. It has an expected earnings growth rate of 31.4% for the current year (ending January 2022). It recorded earnings surprises in the last four reported quarters, with an average beat of 62.1%. This Zacks Rank #3 company is set to release second-quarter fiscal 2021 earnings results on Aug 18, before the opening bell.
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5 Retail Bigwigs Likely to Gain on Earnings Next Week
We are in the last leg of the second-quarter 2021 earnings season. So far, results are highly impressive with all-round strength. Aggregate earnings of the market's benchmark — the S&P 500 Index — are on track to register a new all-time high with significant momentum on the revenue front.
Most of the companies of the major sectors and industries have already reported their quarterly results. The notable exception is the retail sector as several retail behemoths are slated to report their earnings results next week.
Retail Sector Q2 Performance in a Nutshell
Last quarter was a mixed one for the retail sector. Retail sales increased 0.9% in April followed by a significant decline of 1.7% in May. However, the sector returned to the positive territory in June as sales rose 0.6%. Core retail sales (excluding the volatile auto sales) remained flat in April with the previous month. However, the metric declined 0.9% in May followed by a strong recovery of 1.3% gain in June.
Retail sales in April and May were dented by a major spike in the general price level and investors' concern that the Fed may be compelled to start tapering its existing $120 billion per month bond-buying program. A reduction in the quantitative easing program will raise the market's risk-free interest rate.
The core PCE price index, core consumer price index and producer price index jumped to more than a decade high. Moreover, the resurgence of the highly-infectious Delta string of coronavirus in several U.S. states shook market participants' confidence.
Robust Q2 Earnings Results
As of Aug 11, 454 companies of the S&P 500 Index reported results. Total earnings of these companies jumped 102.8% year over year on 27.5% higher revenues. Moreover, 87% of these companies beat their earnings per share (EPS) estimates and a record 86.6% surpassed revenue estimates.
For the second quarter as a whole, total earnings of the S&P 500 Index are expected to be up 92.5% year over year on 24.8% higher revenues. This indicates a massive improvement over the initial projection of EPS increasing 62.2% from the same period last year on 18.2% higher revenues.
These estimates are impressive primarily because second-quarter 2020 witnessed a lockdown owing to the global outbreak of the deadly coronavirus. Notwithstanding favorable comparisons with last year, second-quarter 2021 earnings estimates indicate more than 25% growth from the pre-pandemic second quarter of 2019.
More importantly, earnings expectations are increasing for the quarters yet to be reported. For example, expectations for aggregate earnings of the S&P 500 Index for third-quarter 2021 increased steadily from 13.5% on Jan 6 to 26.2% on Aug 11.
As of Aug 11, total 2021 earnings of the S&P 500 Index were projected to climb 41.9% on 12.7% higher revenues. For 2022 and 2023, S&P 500's total earnings like to grow 9.4% and 10.2% on 6.6% and 4.8% higher revenues, respectively.
Stocks in Focus
Five retail giants (market capital > $185 billion) are slated to release earnings results next week. Each of these stocks carries either a Zacks Rank #2 (Buy) or 3 (Hold) and has a positive Earnings ESP. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Our research shows that for stocks with the combination of a Zacks Rank #3 or better and a positive Earnings ESP, the chance of an earnings beat is as high as 70%. These stocks are anticipated to appreciate after earnings releases. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
The chart below shows the price performance of five stocks mentioned below in the last quarter.
Image Source: Zacks Investment Research
Walmart Inc. (WMT - Free Report) has been gaining from its sturdy comparable store sales record, which in turn is driven by its constant expansion efforts and splendid e-commerce performance. Walmart has been undertaking several efforts to enhance merchandise assortments. Also, the company has been focused on store remodeling stores, in an attempt to upgrade them with advanced in-store and digital innovations.
The company has an Earnings ESP of +1.14%. It has an expected earnings growth rate of 9.1% for the current year (ending January 2022). The Zacks Consensus Estimate for current-year earnings improved 0.3% over the last 7 days.
Walmart recorded earnings surprises in three out of the last four quarters, with an average beat of 17.8%. This Zacks Rank #2 company is set to release second-quarter fiscal 2022 earnings results on Aug 17, before the opening bell.
The Home Depot Inc. (HD - Free Report) is witnessing significant benefits from the execution of the “One Home Depot” investment plan, which focuses on expanding supply chain facilities, technology investments and enhancement to the digital experience. Amid the pandemic, customers have been increasingly blending the physical and digital elements of the shopping experience, making the interconnected One Home Depot strategy most relevant.
The company has an Earnings ESP of +1.24%. It has an expected earnings growth rate of 17.5% for the current year (ending January 2022). The Zacks Consensus Estimate for current-year earnings improved 0.3% over the last 7 days.
Home Depot recorded earnings surprises in the last four reported quarters, with an average beat of 9.9%. This Zacks Rank #3 company is set to release second-quarter fiscal 2021 earnings results on Aug 17, before the opening bell.
Lowe's Companies Inc. (LOW - Free Report) remains well positioned to capitalize on the demand in the home improvement market backed by investments in technology, merchandise category and strength in Pro business. Its new total home strategy that includes providing complete solutions for various types of home repair and improvement needs bodes well. The strategy is an extension of the company’s retail-fundamentals approach.
The company has an Earnings ESP of +0.85%. It has an expected earnings growth rate of 23.1% for the current year (ending January 2022). The Zacks Consensus Estimate for current-year earnings improved 0.3% over the last 7 days.
Lowe's Companies recorded earnings surprises in the last four reported quarters, with an average beat of 14.4%. This Zacks Rank #3 company is set to release second-quarter fiscal 2021 earnings results on Aug 18, before the opening bell.
The TJX Companies Inc. (TJX - Free Report) has been benefiting from its solid store and e-commerce growth efforts. It regularly opens stores and expands fast across the United States, Europe, Canada and Australia. With an increasing number of consumers resorting to online shopping, the company has undertaken several initiatives to boost online sales and strengthen its e-commerce business.
The company has an Earnings ESP of +4.06%. It has an expected earnings growth rate of more than 100% for the current year (ending January 2022). The Zacks Consensus Estimate for current-year earnings improved 0.4% over the last 7 days. This Zacks Rank #2 company is set to release second-quarter fiscal 2021 earnings results on Aug 18, before the opening bell.
Target Corp. (TGT - Free Report) operates as a general merchandise retailer in the United States. It has undertaken several strategic initiatives to boost its performance. The increase in sales was led by the Apparel, Home, Hardlines, Beauty, Essentials and Food & Beverage categories. Target continues to lay emphasis on developing flexible format stores to penetrate deeper into urban and suburban areas.
The company has an Earnings ESP of +4.93%. It has an expected earnings growth rate of 31.4% for the current year (ending January 2022). It recorded earnings surprises in the last four reported quarters, with an average beat of 62.1%. This Zacks Rank #3 company is set to release second-quarter fiscal 2021 earnings results on Aug 18, before the opening bell.