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Start of Big-Box Q3 Earnings Puts Retail ETFs in Focus
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The retail sector is in focus with the earnings releases of big retailers lined up. Big-box retailers like Wal-Mart (WMT - Free Report) , Lowe’s (LOW - Free Report) and Target (TGT - Free Report) , as well as store channels like Nordstrom (JWN - Free Report) and Kohl’s (KSS - Free Report) are expected to report this week and the next. Meanwhile, Home Depot (HD - Free Report) has already reported.
The world's largest home improvement retailer, Home Depot, reported better-than-expected results but slashed its full-year profit forecasts. Earnings per share came in at $3.81, beating the Zacks Consensus Estimate by a couple of cents and improving from the year-ago earnings of $4.24. Revenues fell 3% year over year to $37.7 billion. The company narrowed its full-year guidance, saying it now expects sales and comparable sales to decline between 3% and 4% compared to its previous 2% to 5% range.
On the S&P 500 Index, 20 out of 32 retailers have already reported. Earnings of these companies are up 53% from the same period last year on 10.3% higher revenues, with 85% beating EPS estimates and 75% beating revenue estimates. Overall, the retail sector is expected to report earnings growth of 24.9% on 5.9% revenue growth.
Given this, traditional retail ETFs are in focus. SPDR S&P Retail ETF (XRT - Free Report) and VanEck Vectors Retail ETF (RTH - Free Report) have shed 9.1% and 2.9%, respectively, in the past three months.
What Our Model Unveils for Retailer Earnings
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.
Wal-Mart has an Earnings ESP of +0.63% and a Zacks Rank #2. The company saw a positive earnings estimate revision of a penny 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 good indicator for the stock. Wal-Mart delivered an average earnings surprise of 11.60% in the last four quarters. Wal-Mart is scheduled to report on Nov 16 before market open and has a VGM Score of A (see: all the Consumer Discretionary ETFs here).
Home Depot has an Earnings ESP of -0.83% and a Zacks Rank #4 (Sell). The company saw a negative earnings estimate revision of 3 cents over the past seven days for the to-be-reported quarter. It delivered an average earnings surprise of 2.22% in the last four quarters. Home Depot is scheduled to report on Nov 14, before market open, and has a VGM Score of B.
Target has an Earnings ESP of +3.09% and a Zacks Rank #4. The company saw a negative earnings estimate revision of a penny over the past seven days for the to-be-reported quarter but delivered an earnings surprise of 13.27% for the last four quarters. Target will report earnings on Nov 15, before the opening bell and has a VGM Score of A.
Lowe’s has an Earnings ESP of -0.32% and a Zacks Rank #4. The company witnessed a negative earnings estimate revision of a couple of cents over the past seven days for the to-be-reported quarter but delivered an earnings surprise of 3.83%, on average, in the last four quarters. LOW has a VGM Score of B and is slated to report earnings before the bell on Nov 21.
Nordstrom has an Earnings ESP of -21.63% and a Zacks Rank #3. It saw a negative earnings estimate revision of a penny for the to-be-reported quarter in the past 30 days. The company delivered an earnings surprise of 75.43%, on average, over the past four quarters. It is scheduled to report earnings on Nov 21 after the closing bell and has a VGM Score of A.
Kohl’s has an Earnings ESP of +3.46% and a Zacks Rank #3. It saw a positive earnings estimate revision of a couple of cents for the to-be-reported quarter in the past seven days. Kohl’s delivered a negative average earnings surprise of 23.58% in the last four quarters. The company is expected to report before the opening bell on Nov 21. It has a VGM Score of A.
SPDR S&P Retail ETF tracks the S&P Retail Select Industry Index, which provides exposure across large-, mid- and small-cap stocks. It holds 78 well-diversified stocks in its basket, with none making up for more than a 2% share. Additionally, SPDR S&P Retail ETF is well spread across various industries with a double-digit allocation each in apparel retail, specialty retail, automotive retail and broad-line retail (read: 5 Sector ETFs for Bountiful Returns in November).
SPDR S&P Retail ETF is the largest and most popular in the retail space, with AUM of $308.7 million and an average trading volume of 6.6 million shares. It charges 35 bps in annual fees and has a Zacks ETF Rank #2 with a Medium risk outlook.
VanEck Vectors Retail ETF provides exposure to the 26 largest retail firms by tracking the MVIS US Listed Retail 25 Index, which measures the performance of the companies involved in retail distribution, wholesalers, online, direct mail and TV retailers, multi-line retailers, specialty retailers and food and other staples retailers. VanEck Vectors Retail ETF is highly concentrated on the top firm with more than 21% exposure, while the other firms hold no more than 8.8% share (read: Amazon Q3 Earnings Triple YoY: ETFs to Tap).
VanEck Vectors Retail ETF has amassed $166.9 million in its asset base and charges 35 bps in annual fees. It trades in a lower volume of 5,000 shares a day on average. VanEck Vectors Retail ETF has a Zacks ETF Rank #3 with a Medium risk outlook.
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Start of Big-Box Q3 Earnings Puts Retail ETFs in Focus
The retail sector is in focus with the earnings releases of big retailers lined up. Big-box retailers like Wal-Mart (WMT - Free Report) , Lowe’s (LOW - Free Report) and Target (TGT - Free Report) , as well as store channels like Nordstrom (JWN - Free Report) and Kohl’s (KSS - Free Report) are expected to report this week and the next. Meanwhile, Home Depot (HD - Free Report) has already reported.
The world's largest home improvement retailer, Home Depot, reported better-than-expected results but slashed its full-year profit forecasts. Earnings per share came in at $3.81, beating the Zacks Consensus Estimate by a couple of cents and improving from the year-ago earnings of $4.24. Revenues fell 3% year over year to $37.7 billion. The company narrowed its full-year guidance, saying it now expects sales and comparable sales to decline between 3% and 4% compared to its previous 2% to 5% range.
On the S&P 500 Index, 20 out of 32 retailers have already reported. Earnings of these companies are up 53% from the same period last year on 10.3% higher revenues, with 85% beating EPS estimates and 75% beating revenue estimates. Overall, the retail sector is expected to report earnings growth of 24.9% on 5.9% revenue growth.
Given this, traditional retail ETFs are in focus. SPDR S&P Retail ETF (XRT - Free Report) and VanEck Vectors Retail ETF (RTH - Free Report) have shed 9.1% and 2.9%, respectively, in the past three months.
What Our Model Unveils for Retailer Earnings
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.
Wal-Mart has an Earnings ESP of +0.63% and a Zacks Rank #2. The company saw a positive earnings estimate revision of a penny 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 good indicator for the stock. Wal-Mart delivered an average earnings surprise of 11.60% in the last four quarters. Wal-Mart is scheduled to report on Nov 16 before market open and has a VGM Score of A (see: all the Consumer Discretionary ETFs here).
Home Depot has an Earnings ESP of -0.83% and a Zacks Rank #4 (Sell). The company saw a negative earnings estimate revision of 3 cents over the past seven days for the to-be-reported quarter. It delivered an average earnings surprise of 2.22% in the last four quarters. Home Depot is scheduled to report on Nov 14, before market open, and has a VGM Score of B.
Target has an Earnings ESP of +3.09% and a Zacks Rank #4. The company saw a negative earnings estimate revision of a penny over the past seven days for the to-be-reported quarter but delivered an earnings surprise of 13.27% for the last four quarters. Target will report earnings on Nov 15, before the opening bell and has a VGM Score of A.
Lowe’s has an Earnings ESP of -0.32% and a Zacks Rank #4. The company witnessed a negative earnings estimate revision of a couple of cents over the past seven days for the to-be-reported quarter but delivered an earnings surprise of 3.83%, on average, in the last four quarters. LOW has a VGM Score of B and is slated to report earnings before the bell on Nov 21.
Nordstrom has an Earnings ESP of -21.63% and a Zacks Rank #3. It saw a negative earnings estimate revision of a penny for the to-be-reported quarter in the past 30 days. The company delivered an earnings surprise of 75.43%, on average, over the past four quarters. It is scheduled to report earnings on Nov 21 after the closing bell and has a VGM Score of A.
Kohl’s has an Earnings ESP of +3.46% and a Zacks Rank #3. It saw a positive earnings estimate revision of a couple of cents for the to-be-reported quarter in the past seven days. Kohl’s delivered a negative average earnings surprise of 23.58% in the last four quarters. The company is expected to report before the opening bell on Nov 21. It has a VGM Score of A.
ETFs in Focus
SPDR S&P Retail ETF (XRT - Free Report)
SPDR S&P Retail ETF tracks the S&P Retail Select Industry Index, which provides exposure across large-, mid- and small-cap stocks. It holds 78 well-diversified stocks in its basket, with none making up for more than a 2% share. Additionally, SPDR S&P Retail ETF is well spread across various industries with a double-digit allocation each in apparel retail, specialty retail, automotive retail and broad-line retail (read: 5 Sector ETFs for Bountiful Returns in November).
SPDR S&P Retail ETF is the largest and most popular in the retail space, with AUM of $308.7 million and an average trading volume of 6.6 million shares. It charges 35 bps in annual fees and has a Zacks ETF Rank #2 with a Medium risk outlook.
VanEck Vectors Retail ETF (RTH - Free Report)
VanEck Vectors Retail ETF provides exposure to the 26 largest retail firms by tracking the MVIS US Listed Retail 25 Index, which measures the performance of the companies involved in retail distribution, wholesalers, online, direct mail and TV retailers, multi-line retailers, specialty retailers and food and other staples retailers. VanEck Vectors Retail ETF is highly concentrated on the top firm with more than 21% exposure, while the other firms hold no more than 8.8% share (read: Amazon Q3 Earnings Triple YoY: ETFs to Tap).
VanEck Vectors Retail ETF has amassed $166.9 million in its asset base and charges 35 bps in annual fees. It trades in a lower volume of 5,000 shares a day on average. VanEck Vectors Retail ETF has a Zacks ETF Rank #3 with a Medium risk outlook.