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5 Retailers to Buy Ahead of Earnings Results This Month
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We are in the last leg of the third-quarter 2023 earnings season. So far, the results are better than expected. The season started with weak expectations as the market’s benchmark — the S&P 500 Index — was expected to witness the fourth consecutive quarter of earnings decline. However, the scenario took a complete turn as the season progressed.
As of Nov 3, 405 companies have reported results. Total earnings of these companies are up 0.4% year over year on 1.6% higher revenues, with 92.5% beating EPS estimates and 61.5% beating revenue estimates.
For third-quarter 2023, total earnings of the S&P 500 companies are currently expected to be up 1.5% year over year on 1.5% higher revenues. If this estimation holds, third-quarter 2023 will be the first quarter of positive earnings growth for the S&P 500 Index after three consecutive quarters of earnings decline.
Major companies of most of the sectors have already reported their quarterly financial numbers. However, the retail sector is an exception. This sector performed strongly in the last quarter. U.S. consumer consumption remained rock solid despite elevated inflation rate, dwindling savings and income.
Our research shows that for stocks with the combination of a Zacks Rank #3 (Hold) 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 their earnings release. 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 our five picks in the last quarter.
Image Source: Zacks Investment Research
Walmart Inc. (WMT - Free Report) has been benefiting from its robust omnichannel operations due to its efforts to enhance store and online experience. WMT has been particularly gaining from its efforts to boost delivery services.
Increased market share in grocery continued to boost U.S. comps in the first quarter of fiscal 2024. Strong comps growth globally, expense leverage and e-commerce growth across all units favored the company. WMT raised its guidance for fiscal 2024.
Walmart has an Earnings ESP of +1.02%. It has an expected earnings growth rate of 2.4% for the current year (ending January 2024). The Zacks Consensus Estimate for current-year earnings has improved 1.6% over the last 30 days. WMT recorded earnings surprises in the last four reported quarters, with an average beat of 11.6%. The company is set to release earnings results on Nov 16, before the opening bell.
The TJX Companies Inc. (TJX - Free Report) is benefiting from its solid store and e-commerce growth efforts. TJX’s off-price business model, strategic store locations, brands and fashion products and supply-chain management have been working well. TJX’s Marmaxx segment is doing particularly well, wherein comparative store sales increased in the first quarter of fiscal 2024, backed by improved customer traffic.
The TJX Companies has an Earnings ESP of +3.22%. It has an expected earnings growth rate of 19.6% for the current year (ending January 2024). The Zacks Consensus Estimate for current-year earnings has improved 0.3% over the last 30 days.
TJX recorded earnings surprises in the last four reported quarters, with an average beat of 6.6%. The company is set to release earnings results on Nov 15, before the opening bell.
Ross Stores Inc. (ROST - Free Report) has benefited from positive customer response to its improved merchandise and strong value offerings. ROST has been benefiting from the execution of its store expansion plans over the years.
ROST operates a chain of off-price retail apparel and home accessories stores, which target value-conscious men and women, aged 25 to 54 in middle-to-upper middle-class households. ROST has a proven business model as the competitive bargains it offers continue to make its stores attractive destinations for customers in all economic scenarios.
Ross Stores has an Earnings ESP of +2.40%. It has an expected earnings growth rate of 19.4% for the current year (ending January 2024). The Zacks Consensus Estimate for current-year earnings has improved 5.7% over the last 90 days.
ROST recorded earnings surprises in the last four reported quarters, with an average beat of 11.4%. The company is set to release earnings results on Nov 16, after the closing bell.
The Gap Inc. (GPS - Free Report) received a boost on the back of lower airfreight and improved promotions which aided its margins. GPS is on track with the execution of its Power Plan 2023. Lower advertising expenses and technology investments resulting from cost-saving actions also bode well for GPS.
The Gap has an Earnings ESP of +32.31%. It has an expected earnings growth rate of more than 100% for the current year (ending January 2024). The Zacks Consensus Estimate for current-year earnings has improved 1.4% over the last seven days.
GPS recorded earnings surprises in three out of the last four reported quarters, with an average beat of 1,001.6%. The company is set to release earnings results on Nov 16, after the closing bell.
Abercrombie & Fitch Co. (ANF - Free Report) has benefitted from the continued momentum in the Abercrombie brand and a sequential improvement in the Hollister brand. Lower freight costs and robust AUR growth aided margins. Consequently, ANF expects year-over-year sales growth of 10% for fiscal 2023. Store optimization and the Always Forward plan bode well.
Abercrombie & Fitch has an Earnings ESP of +1.87%. It has an expected earnings growth rate of more than 100% for the current year (ending January 2024). The Zacks Consensus Estimate for current-year earnings has improved 0.2% over the last 30 days.
ANF recorded earnings surprises in three out of the last four reported quarters, with an average beat of 724.8%. The company is set to release earnings results on Nov 21, before the opening bell.
Image: Shutterstock
5 Retailers to Buy Ahead of Earnings Results This Month
We are in the last leg of the third-quarter 2023 earnings season. So far, the results are better than expected. The season started with weak expectations as the market’s benchmark — the S&P 500 Index — was expected to witness the fourth consecutive quarter of earnings decline. However, the scenario took a complete turn as the season progressed.
As of Nov 3, 405 companies have reported results. Total earnings of these companies are up 0.4% year over year on 1.6% higher revenues, with 92.5% beating EPS estimates and 61.5% beating revenue estimates.
For third-quarter 2023, total earnings of the S&P 500 companies are currently expected to be up 1.5% year over year on 1.5% higher revenues. If this estimation holds, third-quarter 2023 will be the first quarter of positive earnings growth for the S&P 500 Index after three consecutive quarters of earnings decline.
Major companies of most of the sectors have already reported their quarterly financial numbers. However, the retail sector is an exception. This sector performed strongly in the last quarter. U.S. consumer consumption remained rock solid despite elevated inflation rate, dwindling savings and income.
Our Top Picks
We have narrowed our search to five retailers that are set to beat earnings estimates this month. Each of these stocks carries a Zacks Rank #2 (Buy) 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 (Hold) 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 their earnings release. 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 our five picks in the last quarter.
Image Source: Zacks Investment Research
Walmart Inc. (WMT - Free Report) has been benefiting from its robust omnichannel operations due to its efforts to enhance store and online experience. WMT has been particularly gaining from its efforts to boost delivery services.
Increased market share in grocery continued to boost U.S. comps in the first quarter of fiscal 2024. Strong comps growth globally, expense leverage and e-commerce growth across all units favored the company. WMT raised its guidance for fiscal 2024.
Walmart has an Earnings ESP of +1.02%. It has an expected earnings growth rate of 2.4% for the current year (ending January 2024). The Zacks Consensus Estimate for current-year earnings has improved 1.6% over the last 30 days.
WMT recorded earnings surprises in the last four reported quarters, with an average beat of 11.6%. The company is set to release earnings results on Nov 16, before the opening bell.
The TJX Companies Inc. (TJX - Free Report) is benefiting from its solid store and e-commerce growth efforts. TJX’s off-price business model, strategic store locations, brands and fashion products and supply-chain management have been working well. TJX’s Marmaxx segment is doing particularly well, wherein comparative store sales increased in the first quarter of fiscal 2024, backed by improved customer traffic.
The TJX Companies has an Earnings ESP of +3.22%. It has an expected earnings growth rate of 19.6% for the current year (ending January 2024). The Zacks Consensus Estimate for current-year earnings has improved 0.3% over the last 30 days.
TJX recorded earnings surprises in the last four reported quarters, with an average beat of 6.6%. The company is set to release earnings results on Nov 15, before the opening bell.
Ross Stores Inc. (ROST - Free Report) has benefited from positive customer response to its improved merchandise and strong value offerings. ROST has been benefiting from the execution of its store expansion plans over the years.
ROST operates a chain of off-price retail apparel and home accessories stores, which target value-conscious men and women, aged 25 to 54 in middle-to-upper middle-class households. ROST has a proven business model as the competitive bargains it offers continue to make its stores attractive destinations for customers in all economic scenarios.
Ross Stores has an Earnings ESP of +2.40%. It has an expected earnings growth rate of 19.4% for the current year (ending January 2024). The Zacks Consensus Estimate for current-year earnings has improved 5.7% over the last 90 days.
ROST recorded earnings surprises in the last four reported quarters, with an average beat of 11.4%. The company is set to release earnings results on Nov 16, after the closing bell.
The Gap Inc. (GPS - Free Report) received a boost on the back of lower airfreight and improved promotions which aided its margins. GPS is on track with the execution of its Power Plan 2023. Lower advertising expenses and technology investments resulting from cost-saving actions also bode well for GPS.
The Gap has an Earnings ESP of +32.31%. It has an expected earnings growth rate of more than 100% for the current year (ending January 2024). The Zacks Consensus Estimate for current-year earnings has improved 1.4% over the last seven days.
GPS recorded earnings surprises in three out of the last four reported quarters, with an average beat of 1,001.6%. The company is set to release earnings results on Nov 16, after the closing bell.
Abercrombie & Fitch Co. (ANF - Free Report) has benefitted from the continued momentum in the Abercrombie brand and a sequential improvement in the Hollister brand. Lower freight costs and robust AUR growth aided margins. Consequently, ANF expects year-over-year sales growth of 10% for fiscal 2023. Store optimization and the Always Forward plan bode well.
Abercrombie & Fitch has an Earnings ESP of +1.87%. It has an expected earnings growth rate of more than 100% for the current year (ending January 2024). The Zacks Consensus Estimate for current-year earnings has improved 0.2% over the last 30 days.
ANF recorded earnings surprises in three out of the last four reported quarters, with an average beat of 724.8%. The company is set to release earnings results on Nov 21, before the opening bell.
Stay on top of upcoming earnings announcements with the Zacks Earnings Calendar.