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The second-quarter earnings season has effectively come to an end for most of the sectors, except retail, nearly 34% of which is still to report. Total earnings for the companies that have reported so far are up 78.6% on 22% revenue growth, with 94.4% beating EPS estimates and 94.4% beating on revenues.
Retail sector results reported so far were primarily from online vendors and restaurant players. The focus now shifts to traditional brick-and-mortar retailers like Wal-Mart (WMT - Free Report) , Home Depot (HD - Free Report) , Lowe’s (LOW - Free Report) and Target (TGT - Free Report) , and store channels like Nordstrom (JWN - Free Report) and Kohls (KSS - Free Report) that are expected to report this week and in the next. The stocks of most of these traditional operators have been performing well as cheap money, rapid COVID-19 vaccination and business re-openings have spurred consumer spending, leading to an increase in retail sales (read: ETFs to Win on Strong US Consumer Confidence Levels in July).
As a result, retail ETFs SPDR S&P Retail ETF (XRT - Free Report) and First Trust Nasdaq Retail ETF have gained at least 3.6% each in the past month while VanEck Vectors Retail ETF (RTH - Free Report) has added 1.5%.
According to our methodology, the combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the chances of an earnings beat. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
A Peek at the Earnings Lineup
Wal-Mart is scheduled to report on Aug 17 before market open. It has a Zacks Rank #2 and an Earnings ESP of +1.07%, indicating higher chances of beating estimates this quarter. The company saw positive earnings estimate revision of 4 cents over the past seven days for the to-be-reported quarter. Analysts raising estimates right before earnings — with the most up-to-date information possible — is a pretty good indicator of some favorable trends for the stock. The company has delivered an average earnings surprise of 17.76% in the last four quarters. Additionally, the company has a VGM Score of A (see: all the Consumer Discretionary ETFs here).
Home Depot has a Zacks Rank #3 and an Earnings ESP of +1.24%, indicating reasonable chances of beating estimates this quarter. It saw positive earnings estimate revision of 3 cents for the to-be-reported quarter in the past seven days and delivered an average earnings surprise of 2.63% in the last four quarters. The stock has a VGM Score of B. The company is expected to report earnings before the opening bell on Aug 17.
Lowe’s is slated to report earnings before the bell on Aug 18. The stock has a Zacks Rank #3 and an Earnings ESP of +0.38%. The company has seen positive earnings estimate revision of 6 cents over the past seven days for the to-be-reported quarter and delivered an earnings surprise of 14.43%, on average, in the last four quarters. The stock has a VGM Score of A.
Target is also likely to report earnings on Aug 18 before the opening bell. It has a Zacks Rank #3 and an Earnings ESP of +2.89%. The company saw positive earnings estimate revision of 7 cents over the past seven days for the to-be-reported quarter and delivered an average earnings surprise of 62.05% in the last four quarters. It has a VGM Score of A (read: Bet on Top-Ranked Sectors With These ETFs & Stocks).
Nordstrom, which will likely report earnings on Aug 24 after the closing bell, has a Zacks Rank #3 and an Earnings ESP of 1.61%. It has seen earnings estimate revision of a penny for the to-be-reported quarter in the past 7 days. The company delivered an earnings surprise of 532.65%, on average, over the past four quarters. It has a VGM Score of D.
Kohls has a Zacks Rank #1 and an Earnings ESP of +43.03%. It saw positive earnings estimate revision of 11 cents for the to-be-reported quarter in the past 7 days. Additionally, it delivered an average earnings surprise of 96.21% in the last four quarters and has a VGM Score of A. The company is expected to report before the opening bell on Aug 19.
Conclusion
With some earnings surprises in the cards, retail ETFs are expected to see smooth trading in the days ahead.
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Retail ETFs in Focus Ahead of Big-Box Q2 Earnings
The second-quarter earnings season has effectively come to an end for most of the sectors, except retail, nearly 34% of which is still to report. Total earnings for the companies that have reported so far are up 78.6% on 22% revenue growth, with 94.4% beating EPS estimates and 94.4% beating on revenues.
Retail sector results reported so far were primarily from online vendors and restaurant players. The focus now shifts to traditional brick-and-mortar retailers like Wal-Mart (WMT - Free Report) , Home Depot (HD - Free Report) , Lowe’s (LOW - Free Report) and Target (TGT - Free Report) , and store channels like Nordstrom (JWN - Free Report) and Kohls (KSS - Free Report) that are expected to report this week and in the next. The stocks of most of these traditional operators have been performing well as cheap money, rapid COVID-19 vaccination and business re-openings have spurred consumer spending, leading to an increase in retail sales (read: ETFs to Win on Strong US Consumer Confidence Levels in July).
As a result, retail ETFs SPDR S&P Retail ETF (XRT - Free Report) and First Trust Nasdaq Retail ETF have gained at least 3.6% each in the past month while VanEck Vectors Retail ETF (RTH - Free Report) has added 1.5%.
According to our methodology, the combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the chances of an earnings beat. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
A Peek at the Earnings Lineup
Wal-Mart is scheduled to report on Aug 17 before market open. It has a Zacks Rank #2 and an Earnings ESP of +1.07%, indicating higher chances of beating estimates this quarter. The company saw positive earnings estimate revision of 4 cents over the past seven days for the to-be-reported quarter. Analysts raising estimates right before earnings — with the most up-to-date information possible — is a pretty good indicator of some favorable trends for the stock. The company has delivered an average earnings surprise of 17.76% in the last four quarters. Additionally, the company has a VGM Score of A (see: all the Consumer Discretionary ETFs here).
Home Depot has a Zacks Rank #3 and an Earnings ESP of +1.24%, indicating reasonable chances of beating estimates this quarter. It saw positive earnings estimate revision of 3 cents for the to-be-reported quarter in the past seven days and delivered an average earnings surprise of 2.63% in the last four quarters. The stock has a VGM Score of B. The company is expected to report earnings before the opening bell on Aug 17.
Lowe’s is slated to report earnings before the bell on Aug 18. The stock has a Zacks Rank #3 and an Earnings ESP of +0.38%. The company has seen positive earnings estimate revision of 6 cents over the past seven days for the to-be-reported quarter and delivered an earnings surprise of 14.43%, on average, in the last four quarters. The stock has a VGM Score of A.
Target is also likely to report earnings on Aug 18 before the opening bell. It has a Zacks Rank #3 and an Earnings ESP of +2.89%. The company saw positive earnings estimate revision of 7 cents over the past seven days for the to-be-reported quarter and delivered an average earnings surprise of 62.05% in the last four quarters. It has a VGM Score of A (read: Bet on Top-Ranked Sectors With These ETFs & Stocks).
Nordstrom, which will likely report earnings on Aug 24 after the closing bell, has a Zacks Rank #3 and an Earnings ESP of 1.61%. It has seen earnings estimate revision of a penny for the to-be-reported quarter in the past 7 days. The company delivered an earnings surprise of 532.65%, on average, over the past four quarters. It has a VGM Score of D.
Kohls has a Zacks Rank #1 and an Earnings ESP of +43.03%. It saw positive earnings estimate revision of 11 cents for the to-be-reported quarter in the past 7 days. Additionally, it delivered an average earnings surprise of 96.21% in the last four quarters and has a VGM Score of A. The company is expected to report before the opening bell on Aug 19.
Conclusion
With some earnings surprises in the cards, retail ETFs are expected to see smooth trading in the days ahead.