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5 Giant Retailers Likely to Gain on Earnings This Month
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We are in the second phase of the fourth-quarter 2023 earnings season. Results are, so far, better than expected. As of Feb 16, 396 companies on the S&P 500 Index reported their financial numbers. Total earnings for these index members are up 5.1% from the same period last year on 3.4% higher revenues, with 78.8% beating EPS estimates and 64.4% beating revenue estimates.
At present, total fourth-quarter 2023 earnings for the S&P 500 Index are expected to be up 5.1% on 3.4% higher revenues. This would follow 3.8% earnings growth on 2% higher revenues in the third quarter and three back-to-back quarters of declining earnings before that.
Meanwhile, five retail behemoths are set to beat on earnings this month. The combination of a favorable Zacks Rank and a possible earnings beat should drive their stock prices in the near term.
Retail Sector in Q4 2023
The U.S. economy remains resilient despite the fact that the interest rate is currently at its 22-year high. Aside from a solid labor market, personal consumption expenditure remains strong. Consequently, the retail sector flourished in 2023.
However, 2023-24 holiday retail sales were below expectations. The first post-sales estimate has come from Mastercard SpendingPulse, which reported that holiday retail sales from Nov 1 to Dec 24, increased 3.1% year over year, missing the previous estimate of 3.7%. Online retail sales were up by 6.3% year over year, lagging the prior estimate of 6.7%. In-store sales recorded a year-over-year increase of 2.2%, below the prior estimate of 2.9%.
On the other hand, the industry body — the National Retail Federation (NRF) — provided a rosy picture. However, these are estimates and not actual sales. NRF projected that U.S. holiday retail sales in 2023 will grow 3-4% year over year to $957.3-$966.6 billion.
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 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 gaining from its highly diversified business with contributions from various segments, channels and formats. WMT has been benefiting from an increase in in-store and digital channel traffic due to its robust omnichannel initiatives.
WMT’s strategic focus on enhancing delivery services has been especially rewarding, as evidenced by the constant increase in the market share for groceries. Upsides like these, along with growth in the advertising business, fueled third-quarter fiscal 2024 results and led to a raised fiscal 2024 view.
Walmart has an Earnings ESP of +1.29%. It has an expected earnings growth rate of 7.7% for the current year (ending January 2025). Walmart recorded earnings surprises in the last four reported quarters, with an average beat of 8.2%. The company is set to release earnings results on Feb 20, before the opening bell.
The Home Depot Inc. (HD - Free Report) has been witnessing 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.
The interconnected retail strategy and underlying technology infrastructure have helped HD consistently boost web traffic for the past few quarters. HD is on track with its strategic investments to build a Pro ecosystem.
The Home Depot has an Earnings ESP of +2.99%. It has an expected earnings growth rate of 4.1% for the current year (ending January 2025). The Zacks Consensus Estimate for current-year earnings has improved 0.3% over the last 60 days.
HD recorded earnings surprises in the last four reported quarters, with an average beat of 1.8i%. The company is set to release earnings results on Feb 20, before the opening bell.
The TJX Companies Inc.’s (TJX - Free Report) off-price business model, strategic store locations, impressive brands and fashion products and supply-chain management have been working well. TJX is benefiting from its solid store and e-commerce growth efforts.
The Marmaxx segment of TJX is doing well, where comparable store sales grew in the fiscal third quarter, backed by improved customer traffic. Strength at TJX’s HomeGoods (U.S.) division bodes well. Also, TJX is boosting growth through effective marketing initiatives.
The TJX Companies has an Earnings ESP of +0.54%. It has an expected earnings growth rate of 9.2% for the current year (ending January 2025). The Zacks Consensus Estimate for current-year earnings has improved 0.5% over the last 60 days.
The TJX Companies recorded earnings surprises in the last four reported quarters, with an average beat of 6.3%. The company is set to release earnings results on Feb 28, before the opening bell.
Best Buy Co. Inc. (BBY - Free Report) is focused on making investments in stores and elevating unique experiences. BBY’s top-most priorities are boosting omni-channel capabilities. BBY is constantly conducting various tests and pilots to become a more customer-centric, digitally focused, efficient company. Management is focused on making headway in the health and beauty categories.
Best Buy has an Earnings ESP of +0.64%. It has an expected earnings growth rate of 1.9% for the current year (ending January 2025). The Zacks Consensus Estimate for current-year earnings has improved 0.6% over the last 30 days.
Best Buy recorded earnings surprises in the last four reported quarters, with an average beat of 12.8%. The company is set to release earnings results on Feb 29, before the opening bell.
eBay Inc. (EBAY - Free Report) is benefiting from the solid momentum among advertising offerings. EBAY’s strong traction across its Promoted Listings remains a positive. This is driving EBAY’s momentum among first-party advertising products.
We note that strength in advertising business and managed payments offerings is one of EBAY’s key growth drivers. Additionally, growth initiatives based on enhancing the seller experience by offering innovative seller tools and delivering a better buyer experience by utilizing structured data, are major positives.
eBay has an Earnings ESP of +3.35%. It has an expected earnings growth rate of 5.4% for the current year. The Zacks Consensus Estimate for current-year earnings has improved 0.2% over the last 30 days.
eBay recorded earnings surprises in the last four reported quarters, with an average beat of 3.2%. The company is set to release earnings results on Feb 27, after the closing bell.
Image: Bigstock
5 Giant Retailers Likely to Gain on Earnings This Month
We are in the second phase of the fourth-quarter 2023 earnings season. Results are, so far, better than expected. As of Feb 16, 396 companies on the S&P 500 Index reported their financial numbers. Total earnings for these index members are up 5.1% from the same period last year on 3.4% higher revenues, with 78.8% beating EPS estimates and 64.4% beating revenue estimates.
At present, total fourth-quarter 2023 earnings for the S&P 500 Index are expected to be up 5.1% on 3.4% higher revenues. This would follow 3.8% earnings growth on 2% higher revenues in the third quarter and three back-to-back quarters of declining earnings before that.
Meanwhile, five retail behemoths are set to beat on earnings this month. The combination of a favorable Zacks Rank and a possible earnings beat should drive their stock prices in the near term.
Retail Sector in Q4 2023
The U.S. economy remains resilient despite the fact that the interest rate is currently at its 22-year high. Aside from a solid labor market, personal consumption expenditure remains strong. Consequently, the retail sector flourished in 2023.
However, 2023-24 holiday retail sales were below expectations. The first post-sales estimate has come from Mastercard SpendingPulse, which reported that holiday retail sales from Nov 1 to Dec 24, increased 3.1% year over year, missing the previous estimate of 3.7%. Online retail sales were up by 6.3% year over year, lagging the prior estimate of 6.7%. In-store sales recorded a year-over-year increase of 2.2%, below the prior estimate of 2.9%.
On the other hand, the industry body — the National Retail Federation (NRF) — provided a rosy picture. However, these are estimates and not actual sales. NRF projected that U.S. holiday retail sales in 2023 will grow 3-4% year over year to $957.3-$966.6 billion.
Our Top Picks
We have narrowed our search to five retail stocks that are poised to beat on earnings this month. Each of these stocks carries a Zacks Rank 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 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 gaining from its highly diversified business with contributions from various segments, channels and formats. WMT has been benefiting from an increase in in-store and digital channel traffic due to its robust omnichannel initiatives.
WMT’s strategic focus on enhancing delivery services has been especially rewarding, as evidenced by the constant increase in the market share for groceries. Upsides like these, along with growth in the advertising business, fueled third-quarter fiscal 2024 results and led to a raised fiscal 2024 view.
Walmart has an Earnings ESP of +1.29%. It has an expected earnings growth rate of 7.7% for the current year (ending January 2025). Walmart recorded earnings surprises in the last four reported quarters, with an average beat of 8.2%. The company is set to release earnings results on Feb 20, before the opening bell.
The Home Depot Inc. (HD - Free Report) has been witnessing 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.
The interconnected retail strategy and underlying technology infrastructure have helped HD consistently boost web traffic for the past few quarters. HD is on track with its strategic investments to build a Pro ecosystem.
The Home Depot has an Earnings ESP of +2.99%. It has an expected earnings growth rate of 4.1% for the current year (ending January 2025). The Zacks Consensus Estimate for current-year earnings has improved 0.3% over the last 60 days.
HD recorded earnings surprises in the last four reported quarters, with an average beat of 1.8i%. The company is set to release earnings results on Feb 20, before the opening bell.
The TJX Companies Inc.’s (TJX - Free Report) off-price business model, strategic store locations, impressive brands and fashion products and supply-chain management have been working well. TJX is benefiting from its solid store and e-commerce growth efforts.
The Marmaxx segment of TJX is doing well, where comparable store sales grew in the fiscal third quarter, backed by improved customer traffic. Strength at TJX’s HomeGoods (U.S.) division bodes well. Also, TJX is boosting growth through effective marketing initiatives.
The TJX Companies has an Earnings ESP of +0.54%. It has an expected earnings growth rate of 9.2% for the current year (ending January 2025). The Zacks Consensus Estimate for current-year earnings has improved 0.5% over the last 60 days.
The TJX Companies recorded earnings surprises in the last four reported quarters, with an average beat of 6.3%. The company is set to release earnings results on Feb 28, before the opening bell.
Best Buy Co. Inc. (BBY - Free Report) is focused on making investments in stores and elevating unique experiences. BBY’s top-most priorities are boosting omni-channel capabilities. BBY is constantly conducting various tests and pilots to become a more customer-centric, digitally focused, efficient company. Management is focused on making headway in the health and beauty categories.
Best Buy has an Earnings ESP of +0.64%. It has an expected earnings growth rate of 1.9% for the current year (ending January 2025). The Zacks Consensus Estimate for current-year earnings has improved 0.6% over the last 30 days.
Best Buy recorded earnings surprises in the last four reported quarters, with an average beat of 12.8%. The company is set to release earnings results on Feb 29, before the opening bell.
eBay Inc. (EBAY - Free Report) is benefiting from the solid momentum among advertising offerings. EBAY’s strong traction across its Promoted Listings remains a positive. This is driving EBAY’s momentum among first-party advertising products.
We note that strength in advertising business and managed payments offerings is one of EBAY’s key growth drivers. Additionally, growth initiatives based on enhancing the seller experience by offering innovative seller tools and delivering a better buyer experience by utilizing structured data, are major positives.
eBay has an Earnings ESP of +3.35%. It has an expected earnings growth rate of 5.4% for the current year. The Zacks Consensus Estimate for current-year earnings has improved 0.2% over the last 30 days.
eBay recorded earnings surprises in the last four reported quarters, with an average beat of 3.2%. The company is set to release earnings results on Feb 27, after the closing bell.
Stay on top of upcoming earnings announcements with the Zacks Earnings Calendar.