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5 Retail Stocks Set to Beat as Earnings Season Gathers Steam
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The trade hostility between the United States and China has been influencing the market for quite some time now. However, its time you look beyond the trade dispute as Wall Street is geared up to witness an impressive earnings season.
Per the latest Earnings Preview, total earnings for the S&P 500 index is expected to rise 22.3% in second-quarter 2018, with 12 of the 16 Zacks sectors likely to register double-digit earnings growth. Total revenues are projected to improve 8.4%.
Retail-Wholesale, which typically performs well in a maturing economic cycle, is among the sectors that are likely to steal the show this season. Markedly, the sector is anticipated to witness bottom-line growth of 18.4%, while top-line is anticipated to increase 7.9%. The underlying economic strength backed by robust job market, latest tax reform and pro-business policies are likely to act as catalysts for the sector.
Needless to say, the aforementioned factors play a vital role in lifting consumer confidence, enhancing prospects for retailers. We expect this positive sentiment to translate into higher consumer spending — one of the pivotal factors driving the economy. A clear reflection of the same was visible in the U.S. retail sales that rose again in June, marking the fifth straight month of gains with May’s reading revising upward.
The Commerce Department stated that U.S. retail and food services sales in June advanced 0.5% to $506.8 billion, following a revised northbound reading of 1.3% gain in May. Notably, retail sales improved 6.6% from June 2017. Pick up in retail sales is welcome news for retailers, whose fortunes depend upon consumers’ willingness to spend.
Without an iota of doubt, retailers are the end gainers. Notably, the sector has advanced roughly 8% in the past three months outpacing the S&P 500’s growth of approximately 6%. So, picking stocks that are likely to trump estimates can fetch handsome returns. This is because a stock generally picks up steam on an earnings beat.
Picking the Prospective Winners for the Season
All said, we used the Zacks methodology and identified retail stocks that not only boast solid fundamentals but are also poised to beat earnings estimates this reporting cycle. Ourresearch shows that for stocks with the combination of a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) and a positive Earnings ESP, the chance of a positive earnings surprise is as high as 70%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
5 Prominent Picks
Investors can count on Carrols Restaurant Group, Inc. (TAST - Free Report) which operates franchisee restaurants of Burger King. The company delivered an average positive earnings surprise of 14.5% in the trailing four quarters. It has a long-term earnings growth rate of 20%. The Zacks Consensus Estimate for the quarter is pegged at 19 cents. The company, which is scheduled to announce second-quarter 2018 results on Aug 7, has an Earnings ESP of +10.53% and a Zacks Rank #1. You can see the complete list of today’s Zacks #1 Rank stocks here.
Urban Outfitters, Inc. (URBN - Free Report) , which is slated to report second-quarter fiscal 2019 results on Aug 21, is also a solid bet with a long-term earnings growth rate of 12%. The Zacks Consensus Estimate for the quarter under review is pegged at 76 cents. The company delivered an average positive earnings surprise of 19.8% in the trailing four quarters. This lifestyle specialty retailer offering fashion apparel and accessories, footwear and home décor has an Earnings ESP of +1.46% and a Zacks Rank #2.
You may also consider Macy's, Inc. (M - Free Report) with a Zacks Rank #2 and an Earnings ESP of +0.21%. The Zacks Consensus Estimate for the quarter is pegged at 48 cents. The company delivered an average positive earnings surprise of 16.5% in the trailing four quarters. It has a long-term earnings growth rate of 8.5%. This department store retailer is expected to come out with second-quarter fiscal 2018 financial numbers on Aug 9.
Foot Locker, Inc. (FL - Free Report) with a Zacks Rank #2 and an Earnings ESP of +6.51% also deserves a place in your portfolio. The Zacks Consensus Estimate for the quarter is pegged at 70 cents. The company has delivered positive earnings surprises in the preceding three quarters. It has a long-term earnings growth rate of 6.6%. This athletic shoes and apparel retailer is expected to come out with second-quarter fiscal 2018 results on Aug 17.
Another lucrative option is Nordstrom, Inc. (JWN - Free Report) provider of apparel, shoes, cosmetics, and accessories. The stock has a Zacks Rank #3 and an Earnings ESP of +0.64%. The Zacks Consensus Estimate for the quarter is pegged at 82 cents. The company registered an average positive earnings surprise of 7.4% in the trailing four quarters. It has a long-term earnings growth rate of 6%. The company is slated to announce second-quarter fiscal 2018 results on Aug 16.
The Hottest Tech Mega-Trend of All
Last year, it generated $8 billion in global revenues. By 2020, it's predicted to blast through the roof to $47 billion. Famed investor Mark Cuban says it will produce ""the world's first trillionaires,"" but that should still leave plenty of money for regular investors who make the right trades early.
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5 Retail Stocks Set to Beat as Earnings Season Gathers Steam
The trade hostility between the United States and China has been influencing the market for quite some time now. However, its time you look beyond the trade dispute as Wall Street is geared up to witness an impressive earnings season.
Per the latest Earnings Preview, total earnings for the S&P 500 index is expected to rise 22.3% in second-quarter 2018, with 12 of the 16 Zacks sectors likely to register double-digit earnings growth. Total revenues are projected to improve 8.4%.
Retail-Wholesale, which typically performs well in a maturing economic cycle, is among the sectors that are likely to steal the show this season. Markedly, the sector is anticipated to witness bottom-line growth of 18.4%, while top-line is anticipated to increase 7.9%. The underlying economic strength backed by robust job market, latest tax reform and pro-business policies are likely to act as catalysts for the sector.
Needless to say, the aforementioned factors play a vital role in lifting consumer confidence, enhancing prospects for retailers. We expect this positive sentiment to translate into higher consumer spending — one of the pivotal factors driving the economy. A clear reflection of the same was visible in the U.S. retail sales that rose again in June, marking the fifth straight month of gains with May’s reading revising upward.
The Commerce Department stated that U.S. retail and food services sales in June advanced 0.5% to $506.8 billion, following a revised northbound reading of 1.3% gain in May. Notably, retail sales improved 6.6% from June 2017. Pick up in retail sales is welcome news for retailers, whose fortunes depend upon consumers’ willingness to spend.
Without an iota of doubt, retailers are the end gainers. Notably, the sector has advanced roughly 8% in the past three months outpacing the S&P 500’s growth of approximately 6%. So, picking stocks that are likely to trump estimates can fetch handsome returns. This is because a stock generally picks up steam on an earnings beat.
Picking the Prospective Winners for the Season
All said, we used the Zacks methodology and identified retail stocks that not only boast solid fundamentals but are also poised to beat earnings estimates this reporting cycle. Ourresearch shows that for stocks with the combination of a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) and a positive Earnings ESP, the chance of a positive earnings surprise is as high as 70%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
5 Prominent Picks
Investors can count on Carrols Restaurant Group, Inc. (TAST - Free Report) which operates franchisee restaurants of Burger King. The company delivered an average positive earnings surprise of 14.5% in the trailing four quarters. It has a long-term earnings growth rate of 20%. The Zacks Consensus Estimate for the quarter is pegged at 19 cents. The company, which is scheduled to announce second-quarter 2018 results on Aug 7, has an Earnings ESP of +10.53% and a Zacks Rank #1. You can see the complete list of today’s Zacks #1 Rank stocks here.
Urban Outfitters, Inc. (URBN - Free Report) , which is slated to report second-quarter fiscal 2019 results on Aug 21, is also a solid bet with a long-term earnings growth rate of 12%. The Zacks Consensus Estimate for the quarter under review is pegged at 76 cents. The company delivered an average positive earnings surprise of 19.8% in the trailing four quarters. This lifestyle specialty retailer offering fashion apparel and accessories, footwear and home décor has an Earnings ESP of +1.46% and a Zacks Rank #2.
You may also consider Macy's, Inc. (M - Free Report) with a Zacks Rank #2 and an Earnings ESP of +0.21%. The Zacks Consensus Estimate for the quarter is pegged at 48 cents. The company delivered an average positive earnings surprise of 16.5% in the trailing four quarters. It has a long-term earnings growth rate of 8.5%. This department store retailer is expected to come out with second-quarter fiscal 2018 financial numbers on Aug 9.
Foot Locker, Inc. (FL - Free Report) with a Zacks Rank #2 and an Earnings ESP of +6.51% also deserves a place in your portfolio. The Zacks Consensus Estimate for the quarter is pegged at 70 cents. The company has delivered positive earnings surprises in the preceding three quarters. It has a long-term earnings growth rate of 6.6%. This athletic shoes and apparel retailer is expected to come out with second-quarter fiscal 2018 results on Aug 17.
Another lucrative option is Nordstrom, Inc. (JWN - Free Report) provider of apparel, shoes, cosmetics, and accessories. The stock has a Zacks Rank #3 and an Earnings ESP of +0.64%. The Zacks Consensus Estimate for the quarter is pegged at 82 cents. The company registered an average positive earnings surprise of 7.4% in the trailing four quarters. It has a long-term earnings growth rate of 6%. The company is slated to announce second-quarter fiscal 2018 results on Aug 16.
The Hottest Tech Mega-Trend of All
Last year, it generated $8 billion in global revenues. By 2020, it's predicted to blast through the roof to $47 billion. Famed investor Mark Cuban says it will produce ""the world's first trillionaires,"" but that should still leave plenty of money for regular investors who make the right trades early.
See Zacks' 3 Best Stocks to Play This Trend >>