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Wal-Mart, Macy's, Nordstrom, Target, Kohl's are part of Zacks Earnings Preview
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For Immediate Release
Chicago, IL –August 19, 2019 – Zacks.com releases the list of companies likely to issue earnings surprises. This week’s list includes Wal-Mart (WMT - Free Report) , Macy’s (M - Free Report) , Nordstrom (JWN - Free Report) , Target (TGT - Free Report) and Kohl’s (KSS - Free Report) .
Retail Earnings in Focus
The earnings focus remains on the Retail sector, where we have already seen conflicting releases from two bellwethers in the space – Wal-Mart and Macy’s. A host of others are on deck to report, including Nordstrom, Target and Kohl’s.
In total, this upcoming week is the last major reporting week of the Q2 earnings season, with more than 120 companies coming out with results, including 20 S&P 500 members. By the end of the week, we will have seen Q2 results from 480 S&P 500 members – or 96% of the index’s total membership.
Traditional retailers have been dealing with a host of secular headwinds for a while now, which include consumers’ steady shift towards ecommerce and the resulting decline in foot traffic at the mall. This has forced retailers to rethink their business models with varying success.
Macy’s struggles in its latest release, when it missed estimates and guided lower, suggests that it still has plenty to do. Wal-Mart, on the other hand, seems to be on the right track, with many of us looking at the company as true challenger to Amazon’s march.
The overall picture emerging from the Q2 earnings season is good enough: not great, but not bad either. The fact that there is not much growth is hardly news to anyone, as we knew all along the very tough comparisons for this quarter, as well as the remainder of this year. Earnings growth was essentially flat in the first quarter of the year and we appear to be on track for a similar performance in Q2 as well.
Here are the key takeaways from the Q2 earnings season after seeing results from 460 S&P 500 members through Friday, August 16th.
First, no major surprises on the growth front, which we knew would be anemic. We should keep in mind, however, that the growth challenge is more a function of tough comparisons to last year’s record results than a cyclical downturn in profitability.
Total earnings for the 460 index members that have reported are up +0.4% from the same period last year on +4.8% higher revenues. Earnings and revenue growth for the same cohort of companies had been -0.3% and +4.6% in the preceding earnings season, respectively. In other words, earnings and revenue growth is tracking modestly above what we had seen in the March quarter.
Earnings growth for the quarter was expected to be in negative territory before this earnings season got underway. But the blended growth rate, which combines the actual results that have come out with estimates for the still-to-come companies is for +0.2% growth on +4.7% revenue growth.
Second, positive EPS surprises are about in-line with historical trends while the proportion of these companies beating revenue estimates is notably on the weaker side.
For the 460 index members that have reported results already, 75.2% are beating EPS estimates and 57.2% are beating revenue estimates. For the same cohort of companies, the proportion of positive EPS and revenue surprises was 77.2% and 60.2% in the Q1 earnings season.
Third, estimates for 2019 Q3 are coming down more than what we saw in the comparable period for the preceding two quarters, but about in-line with historical trends. The current -4.1% decline is unchanged from last week, but down from -1% in mid-June.
Estimates for full-year 2019 are coming down as well, though the magnitude of negative revisions is a lot lower currently than had been the case at the start of the year.
Zacks Investment Research is under common control with affiliated entities (including a broker-dealer and an investment adviser), which may engage in transactions involving the foregoing securities for the clients of such affiliates.
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 http://www.zacks.com/performance for information about the performance numbers displayed in this press release.
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Wal-Mart, Macy's, Nordstrom, Target, Kohl's are part of Zacks Earnings Preview
For Immediate Release
Chicago, IL –August 19, 2019 – Zacks.com releases the list of companies likely to issue earnings surprises. This week’s list includes Wal-Mart (WMT - Free Report) , Macy’s (M - Free Report) , Nordstrom (JWN - Free Report) , Target (TGT - Free Report) and Kohl’s (KSS - Free Report) .
Retail Earnings in Focus
The earnings focus remains on the Retail sector, where we have already seen conflicting releases from two bellwethers in the space – Wal-Mart and Macy’s. A host of others are on deck to report, including Nordstrom, Target and Kohl’s.
In total, this upcoming week is the last major reporting week of the Q2 earnings season, with more than 120 companies coming out with results, including 20 S&P 500 members. By the end of the week, we will have seen Q2 results from 480 S&P 500 members – or 96% of the index’s total membership.
Traditional retailers have been dealing with a host of secular headwinds for a while now, which include consumers’ steady shift towards ecommerce and the resulting decline in foot traffic at the mall. This has forced retailers to rethink their business models with varying success.
Macy’s struggles in its latest release, when it missed estimates and guided lower, suggests that it still has plenty to do. Wal-Mart, on the other hand, seems to be on the right track, with many of us looking at the company as true challenger to Amazon’s march.
We discussed the contrasting reports from Wal-Mart and Macy’s here: Traditional Retail Is Far from Dead
Our Take on Q2 Earnings Season
The overall picture emerging from the Q2 earnings season is good enough: not great, but not bad either. The fact that there is not much growth is hardly news to anyone, as we knew all along the very tough comparisons for this quarter, as well as the remainder of this year. Earnings growth was essentially flat in the first quarter of the year and we appear to be on track for a similar performance in Q2 as well.
Here are the key takeaways from the Q2 earnings season after seeing results from 460 S&P 500 members through Friday, August 16th.
First, no major surprises on the growth front, which we knew would be anemic. We should keep in mind, however, that the growth challenge is more a function of tough comparisons to last year’s record results than a cyclical downturn in profitability.
Total earnings for the 460 index members that have reported are up +0.4% from the same period last year on +4.8% higher revenues. Earnings and revenue growth for the same cohort of companies had been -0.3% and +4.6% in the preceding earnings season, respectively. In other words, earnings and revenue growth is tracking modestly above what we had seen in the March quarter.
Earnings growth for the quarter was expected to be in negative territory before this earnings season got underway. But the blended growth rate, which combines the actual results that have come out with estimates for the still-to-come companies is for +0.2% growth on +4.7% revenue growth.
Second, positive EPS surprises are about in-line with historical trends while the proportion of these companies beating revenue estimates is notably on the weaker side.
For the 460 index members that have reported results already, 75.2% are beating EPS estimates and 57.2% are beating revenue estimates. For the same cohort of companies, the proportion of positive EPS and revenue surprises was 77.2% and 60.2% in the Q1 earnings season.
Third, estimates for 2019 Q3 are coming down more than what we saw in the comparable period for the preceding two quarters, but about in-line with historical trends. The current -4.1% decline is unchanged from last week, but down from -1% in mid-June.
Estimates for full-year 2019 are coming down as well, though the magnitude of negative revisions is a lot lower currently than had been the case at the start of the year.
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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 http://www.zacks.com/performance for information about the performance numbers displayed in this press release.