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Zacks Earnings Trends Highlights: Walmart, Target and Amazon
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For Immediate Release
Chicago, IL – February 21, 2024 – Zacks Director of Research Sheraz Mian says, "Total earnings for these Retail companies already reported are up +43.1% from the same period last year on +8.4% higher revenues."
Earnings Season: Retail Sector in Focus
Note: The following is an excerpt from this week’s Earnings Trends report. You can access the full report that contains detailed historical actual and estimates for the current and following periods, please click here>>>
Here are the key points:
Total Q4 earnings for the 402 S&P 500 members that have reported results are up +4.9% from the same period last year on +3.4% higher revenues, with 78.6% beating EPS estimates and 64.4% beating revenue estimates.
For the Retail sector, we now have Q4 results for 84.1% of the sector’s market capitalization in the index. Total earnings for these Retail companies are up +43.1% from the same period last year on +8.4% higher revenues, with 89.5% beating EPS estimates and 63.2% beating revenue estimates.
The Q4 EPS beats percentage for these Retail sector companies is notably above what we had seen from the group in other recent periods, but the revenue beats percentage is tracking below other recent quarters.
Looking at Q4 as a whole, combining the actual results that have come out with estimates for the still-to-come companies, total S&P 500 index earnings are currently expected to be up +5.5% from the year-earlier level on +3.2% higher revenues, which would follow the +3.8% earnings growth in 2023 Q3 on +2.0% higher revenues.
Walmart (WMT - Free Report) kicked off the Q4 reporting cycle for the conventional retailers in style by handily beating estimates and providing reassuring guidance that many in the market see as conservative.
The market’s positive reaction to the Walmart release, despite the stock’s impressive recent momentum, shows that the retail giant is able to sustain investors’ enthusiasm. Target (TGT - Free Report) , which reports on March 5th, continues to struggle to gain investors’ confidence.
Walmart’s Q4 earnings increased +5.4% from the year-earlier period on +5.7% higher revenues on better-than-expected same-store sales and improving gross margins. Management noted continued market share gains, particularly on the grocery side, as higher-income households find the combination of Walmart’s value proposition and digital offerings hard to resist. Walmart’s digital unit crossed the $100 billion revenue level in the trailing 12-months through 2023 Q4.
The chart below shows the one-year performance of Walmart shares that are currently trading at their 52-week high relative to Target and the S&P 500 index.
For the Zacks Retail sector, which includes online vendors like Amazon (AMZN - Free Report) and restaurant operators in addition to conventional retailers like Walmart and Target, we now have Q4 results from 84.1% of the sector’s market capitalization in the S&P 500 index. Total earnings for these companies are up +43.1% from the same period last year on +8.4% higher revenues, with 89.5% beating EPS estimates and 63.2% beating revenue estimates.
The Q4 earnings growth pace of +43.1% is mostly thanks to Amazon’s blockbuster results, whose earnings increased +410.9% from the year-earlier level on +13.9% higher revenues. Excluding Amazon’s substantial earnings contribution, Q4 earnings for the rest of the Retail sector companies that have reported would be up +1.9% on +6.4% higher revenues.
Beyond the Retail sector, Q4 earnings for the S&P 500 index are currently expected to be up +5.5% above the year-earlier period on +3.2% higher revenues. This would follow the +3.8% increase in index earnings in 2023 Q3 on +2.3% higher revenues.
Given the expected moderation in the U.S. economy’s growth trajectory due to the cumulative effects of Fed tightening, these estimates likely need to come down. But the +4.7% revenue growth expectation is hardly aggressive, considering that the U.S. economy produced a nominal GDP growth rate in excess of +6% last year.
The rest of the 2024 earnings growth is coming from margin expansion, with 2024 net margins for the index going up to +12.4% from last year’s 11.7%. Embedded in this margin expectation is the view that the inflation cycle has run its course, with easing cost pressures letting net margins return to the 2022 level.
We don’t see this margin (or revenue) outlook as unreasonable or out-of-sync with the economic ground reality.
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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/performance for information about the performance numbers displayed in this press release.
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Zacks Earnings Trends Highlights: Walmart, Target and Amazon
For Immediate Release
Chicago, IL – February 21, 2024 – Zacks Director of Research Sheraz Mian says, "Total earnings for these Retail companies already reported are up +43.1% from the same period last year on +8.4% higher revenues."
Earnings Season: Retail Sector in Focus
Note: The following is an excerpt from this week’s Earnings Trends report. You can access the full report that contains detailed historical actual and estimates for the current and following periods, please click here>>>
Here are the key points:
Walmart (WMT - Free Report) kicked off the Q4 reporting cycle for the conventional retailers in style by handily beating estimates and providing reassuring guidance that many in the market see as conservative.
The market’s positive reaction to the Walmart release, despite the stock’s impressive recent momentum, shows that the retail giant is able to sustain investors’ enthusiasm. Target (TGT - Free Report) , which reports on March 5th, continues to struggle to gain investors’ confidence.
Walmart’s Q4 earnings increased +5.4% from the year-earlier period on +5.7% higher revenues on better-than-expected same-store sales and improving gross margins. Management noted continued market share gains, particularly on the grocery side, as higher-income households find the combination of Walmart’s value proposition and digital offerings hard to resist. Walmart’s digital unit crossed the $100 billion revenue level in the trailing 12-months through 2023 Q4.
The chart below shows the one-year performance of Walmart shares that are currently trading at their 52-week high relative to Target and the S&P 500 index.
For the Zacks Retail sector, which includes online vendors like Amazon (AMZN - Free Report) and restaurant operators in addition to conventional retailers like Walmart and Target, we now have Q4 results from 84.1% of the sector’s market capitalization in the S&P 500 index. Total earnings for these companies are up +43.1% from the same period last year on +8.4% higher revenues, with 89.5% beating EPS estimates and 63.2% beating revenue estimates.
The Q4 earnings growth pace of +43.1% is mostly thanks to Amazon’s blockbuster results, whose earnings increased +410.9% from the year-earlier level on +13.9% higher revenues. Excluding Amazon’s substantial earnings contribution, Q4 earnings for the rest of the Retail sector companies that have reported would be up +1.9% on +6.4% higher revenues.
Beyond the Retail sector, Q4 earnings for the S&P 500 index are currently expected to be up +5.5% above the year-earlier period on +3.2% higher revenues. This would follow the +3.8% increase in index earnings in 2023 Q3 on +2.3% higher revenues.
Given the expected moderation in the U.S. economy’s growth trajectory due to the cumulative effects of Fed tightening, these estimates likely need to come down. But the +4.7% revenue growth expectation is hardly aggressive, considering that the U.S. economy produced a nominal GDP growth rate in excess of +6% last year.
The rest of the 2024 earnings growth is coming from margin expansion, with 2024 net margins for the index going up to +12.4% from last year’s 11.7%. Embedded in this margin expectation is the view that the inflation cycle has run its course, with easing cost pressures letting net margins return to the 2022 level.
We don’t see this margin (or revenue) outlook as unreasonable or out-of-sync with the economic ground reality.
Why Haven’t You Looked at Zacks' Top Stocks?
Since 2000, our top stock-picking strategies have blown away the S&P's +7.0 average gain per year. Amazingly, they soared with average gains of +44.9%, +48.4% 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/performance for information about the performance numbers displayed in this press release.