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Walmart, Target's and Amazon are part of Zacks Earnings Preview
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For Immediate Release
Chicago, IL – November 13, 2023 – Zacks.com releases the list of companies likely to issue earnings surprises. This week’s list includes Walmart (WMT - Free Report) , Target's (TGT - Free Report) and Amazon (AMZN - Free Report) .
Retail Earnings Loom: What's in "Store"?
It didn't take Walmart long after its disappointing quarterly report in May 2022 to regain its mojo. That quarterly report had laid bare the company's failure to be ready for the post-Covid consumer world, resulting in inventory overhang in some product categories.
A few days after the Walmart report, it turned out that it wasn't alone in being unprepared for the shift in consumer demand, as Target's quarterly report showed. Unlike Walmart, however, Target shares never got their mojo back after the May 2022 beating.
This performance context is important to keep in mind as we look ahead to the Target and Walmart quarterly results this week, the former before the market's open on Wednesday, November 15th, and Walmart the day later on Thursday morning (November 16th).
Walmart's quarterly EPS estimates coming into this report have been very stable, with the current Zacks Consensus of $1.51 per share modestly up over the past two months. Unlike Walmart, Target's estimates have been under some pressure lately, with the current Zacks Consensus EPS for Target of $1.47 down from $1.48 a week ago, and $1.92 three months back.
Further reflecting this revisions development, Walmart is currently a Zacks Rank #2 (Buy), while Target is currently a Zacks Rank #4 (Sell).
The stability in Walmart shares makes intuitive sense, as its core business offers a high degree of defense during periods of economic instability and uncertainty. Walmart's 'value orientation' allows it to gain market share as relatively better-off consumers 'trade down' during times of 'economic stress.'
One key point of differentiation between these two retail giants is Walmart's much bigger grocery business compared to Target, which gives its results greater stability given the 'staply' nature of that otherwise low-margin business. The relatively low-margin nature of groceries notwithstanding, they bring in foot traffic and are also responsible for the aforementioned 'trade down' phenomenon that is helping Walmart gain share.
The market liked Target's last quarterly report on August 16th, but the stock has otherwise fallen after each of the five quarterly reports prior to that. Walmart's shares were a hair down following the last report but have otherwise not done much in response to recent reports.
In addition to Walmart and Target, this week's reporting docket includes Home Depot, Macy's, TJX Companies, Gap, and China's Alibaba, to list a few of the notable names.
With respect to the Retail sector 2023 Q3 earnings season scorecard, we now have results from 20 of the 32 retailers in the S&P 500 index.
Regular readers know that Zacks has a dedicated stand-alone economic sector for the retail space, which is unlike the placement of the area in the Consumer Staples and Consumer Discretionary sectors in the Standard & Poor's standard industry classification.
The Zacks Retail sector includes not only Walmart, Target, and other traditional retailers but also online vendors like Amazon and restaurant players. The 20 Zacks Retail companies in the S&P 500 index that have reported Q3 results already belong to the e-commerce and restaurant industries.
Total Q3 earnings for these 20 retailers that have reported are up +53% from the same period last year on +10.3% higher revenues, with 85% beating EPS estimates and 75% beating revenue estimates.
The online players and restaurant operators easily beat EPS and revenue estimates.
Concerning the earnings and revenue growth rates, we like to show the group's performance with and without Amazon, whose results are among the 20 companies that have reported already. As we know, Amazon's Q3 earnings were up +345.9% on +12.6% higher revenues, beating top-and bottom-line expectations.
The digital and brick-and-mortar operators have been converging for some time now. Amazon is now a decent-sized brick-and-mortar operator after Whole Foods, and Walmart is a growing online vendor. This long-standing trend got a huge boost from the Covid lockdowns.
We have started seeing signs of stress at the lower end of income distribution, and one can intuitively project moderation in consumer spending as the economy further slows down under the weight of tighter monetary conditions.
Inflation may be down from the multi-decade highs of a few quarters back, but it still remains a headwind, particularly for the lower end of income distribution. Other issues, like the resumption of student loan payments, are seen as weighing on spending trends. That said, the labor market remains very strong, with wages still going up.
We will hear more about that on the Walmart and Target earnings calls, likely in the context of their outlooks for the coming periods.
Q3 Earnings Scorecard
As of Friday, November 10th, we have seen Q3 results from 458 S&P 500 members, or 91.6% of the index's total membership. The Q3 reporting cycle has now come to an end for 9 of the 16 Zacks sectors.
We have more than 400 companies reporting results this week, including 12 S&P 500 members. Besides the retailers mentioned above, the notable companies reporting this week include Cisco Systems, Applied Materials, Tyson Foods, and others.
Total Q3 earnings for the 458 S&P 500 members are up +1.6% from the same period last year on +1.8% higher revenues, with 81.9% beating EPS estimates and 61.6% beating revenue estimates.
The Earnings Big Picture
Q3 is on track to be the first quarter of positive earnings growth after three back-to-back periods of declines.
Estimates for the current period (2023 Q4) have started coming down over the last few weeks.
Please note that this negative revisions trend contrasts the relatively stable and almost favorable revisions trend that had been in place over the preceding six months. We are seeing cuts to following quarters and full-year 2024 estimates as well.
For a detailed look at the overall earnings picture, including expectations for the coming periods, please check out our weekly Earnings Trends report >>>>Earnings Estimates Come Under Pressure
Why Haven't You Looked at Zacks' Top Stocks?
Since 2000, our top stock-picking strategies have blown away the S&P's +6.2 average gain per year. Amazingly, they soared with average gains of +46.4%, +49.5% and +55.2% per year. Today you can access their live picks without cost or obligation.
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/performancefor information about the performance numbers displayed in this press release.
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Walmart, Target's and Amazon are part of Zacks Earnings Preview
For Immediate Release
Chicago, IL – November 13, 2023 – Zacks.com releases the list of companies likely to issue earnings surprises. This week’s list includes Walmart (WMT - Free Report) , Target's (TGT - Free Report) and Amazon (AMZN - Free Report) .
Retail Earnings Loom: What's in "Store"?
It didn't take Walmart long after its disappointing quarterly report in May 2022 to regain its mojo. That quarterly report had laid bare the company's failure to be ready for the post-Covid consumer world, resulting in inventory overhang in some product categories.
A few days after the Walmart report, it turned out that it wasn't alone in being unprepared for the shift in consumer demand, as Target's quarterly report showed. Unlike Walmart, however, Target shares never got their mojo back after the May 2022 beating.
This performance context is important to keep in mind as we look ahead to the Target and Walmart quarterly results this week, the former before the market's open on Wednesday, November 15th, and Walmart the day later on Thursday morning (November 16th).
Walmart's quarterly EPS estimates coming into this report have been very stable, with the current Zacks Consensus of $1.51 per share modestly up over the past two months. Unlike Walmart, Target's estimates have been under some pressure lately, with the current Zacks Consensus EPS for Target of $1.47 down from $1.48 a week ago, and $1.92 three months back.
Further reflecting this revisions development, Walmart is currently a Zacks Rank #2 (Buy), while Target is currently a Zacks Rank #4 (Sell).
The stability in Walmart shares makes intuitive sense, as its core business offers a high degree of defense during periods of economic instability and uncertainty. Walmart's 'value orientation' allows it to gain market share as relatively better-off consumers 'trade down' during times of 'economic stress.'
One key point of differentiation between these two retail giants is Walmart's much bigger grocery business compared to Target, which gives its results greater stability given the 'staply' nature of that otherwise low-margin business. The relatively low-margin nature of groceries notwithstanding, they bring in foot traffic and are also responsible for the aforementioned 'trade down' phenomenon that is helping Walmart gain share.
The market liked Target's last quarterly report on August 16th, but the stock has otherwise fallen after each of the five quarterly reports prior to that. Walmart's shares were a hair down following the last report but have otherwise not done much in response to recent reports.
In addition to Walmart and Target, this week's reporting docket includes Home Depot, Macy's, TJX Companies, Gap, and China's Alibaba, to list a few of the notable names.
With respect to the Retail sector 2023 Q3 earnings season scorecard, we now have results from 20 of the 32 retailers in the S&P 500 index.
Regular readers know that Zacks has a dedicated stand-alone economic sector for the retail space, which is unlike the placement of the area in the Consumer Staples and Consumer Discretionary sectors in the Standard & Poor's standard industry classification.
The Zacks Retail sector includes not only Walmart, Target, and other traditional retailers but also online vendors like Amazon and restaurant players. The 20 Zacks Retail companies in the S&P 500 index that have reported Q3 results already belong to the e-commerce and restaurant industries.
Total Q3 earnings for these 20 retailers that have reported are up +53% from the same period last year on +10.3% higher revenues, with 85% beating EPS estimates and 75% beating revenue estimates.
The online players and restaurant operators easily beat EPS and revenue estimates.
Concerning the earnings and revenue growth rates, we like to show the group's performance with and without Amazon, whose results are among the 20 companies that have reported already. As we know, Amazon's Q3 earnings were up +345.9% on +12.6% higher revenues, beating top-and bottom-line expectations.
The digital and brick-and-mortar operators have been converging for some time now. Amazon is now a decent-sized brick-and-mortar operator after Whole Foods, and Walmart is a growing online vendor. This long-standing trend got a huge boost from the Covid lockdowns.
We have started seeing signs of stress at the lower end of income distribution, and one can intuitively project moderation in consumer spending as the economy further slows down under the weight of tighter monetary conditions.
Inflation may be down from the multi-decade highs of a few quarters back, but it still remains a headwind, particularly for the lower end of income distribution. Other issues, like the resumption of student loan payments, are seen as weighing on spending trends. That said, the labor market remains very strong, with wages still going up.
We will hear more about that on the Walmart and Target earnings calls, likely in the context of their outlooks for the coming periods.
Q3 Earnings Scorecard
As of Friday, November 10th, we have seen Q3 results from 458 S&P 500 members, or 91.6% of the index's total membership. The Q3 reporting cycle has now come to an end for 9 of the 16 Zacks sectors.
We have more than 400 companies reporting results this week, including 12 S&P 500 members. Besides the retailers mentioned above, the notable companies reporting this week include Cisco Systems, Applied Materials, Tyson Foods, and others.
Total Q3 earnings for the 458 S&P 500 members are up +1.6% from the same period last year on +1.8% higher revenues, with 81.9% beating EPS estimates and 61.6% beating revenue estimates.
The Earnings Big Picture
Q3 is on track to be the first quarter of positive earnings growth after three back-to-back periods of declines.
Estimates for the current period (2023 Q4) have started coming down over the last few weeks.
Please note that this negative revisions trend contrasts the relatively stable and almost favorable revisions trend that had been in place over the preceding six months. We are seeing cuts to following quarters and full-year 2024 estimates as well.
For a detailed look at the overall earnings picture, including expectations for the coming periods, please check out our weekly Earnings Trends report >>>>Earnings Estimates Come Under Pressure
Why Haven't You Looked at Zacks' Top Stocks?
Since 2000, our top stock-picking strategies have blown away the S&P's +6.2 average gain per year. Amazingly, they soared with average gains of +46.4%, +49.5% and +55.2% per year. Today you can access their live picks without cost or obligation.
See Stocks Free >>
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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/performancefor information about the performance numbers displayed in this press release.