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A bulk of the retail sector is gearing up to report first-quarter earnings and a handful of companies from this space are set to beat earnings estimates this month. This raises optimism in an otherwise coronavirus-stricken reporting cycle.
Retail Sector Suffers Due to Pandemic
On Apr 15, the Commerce Department stated that U.S. retail and food services sales in March fell 8.7% to $483.1 billion, following a revised reading of a 0.4% decline in February. However, on May 15, the Commerce Department revised March retail sales to a decline of 8.3%. The unprecedented fall in March retail sales marked the largest monthly decline since the economic recession in November 2008.
The coronavirus pandemic has brought economic activities to a standstill leading to skyrocketing job losses and massive pay cuts. Consequently, this has resulted in sinking consumer confidence and dwindling household income, which have severely impacted spending activities and taken a toll on retailers. Notably, consumer spending constitutes 67% of the U.S. GDP.
Prolonged store closures, supply-chain disruptions, lower traffic trends and limited store operating hours in the wake of the pandemic have significantly impacted retail businesses. People are avoiding public places like restaurants, theaters and malls as social distancing has become the norm.
5 Retailers Set to Beat Earnings Estimates
Despite the overall disappointing earnings session, five retailers are poised to beat earnings estimates this month. Each of these stocks carries either a Zacks Rank #2 (Buy) or 3 (Hold) and has a positive Earnings ESP. You can see the complete list of today’s Zacks #1 Rank 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 expected to soar after 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 five stocks in the last quarter.
Advance Auto Parts Inc. (AAP - Free Report) provides automotive replacement parts, accessories, batteries, and maintenance items for domestic and imported cars, vans, sport utility vehicles, and light and heavy duty truck. The Zacks Rank # 3 company has an Earnings ESP of +13.98% for first-quarter 2020. Advance Auto Parts has a trailing four-quarter positive earnings surprise of 4.1%, on average. The company is set to release earnings results on May 19, before the opening bell.
The Home Depot Inc. (HD - Free Report) is the world’s largest home improvement specialty retailer offering a diverse range of branded and proprietary home improvement items, building materials, lawn and garden products and related services.. The Zacks Rank # 3 company has an Earnings ESP of +1.71% for the first quarter of fiscal 2021.
The Home Depot has a trailing four-quarter positive earnings surprise of 1.7%, on average. The Zacks Consensus Estimate for current-year earnings has improved 0.9% over the last 7 days. The company is set to release earnings results on May 19, before the opening bell.
Lowe's Companies Inc. (LOW - Free Report) is one of the world’s leading home improvement retailers, offering services to homeowners, renters and commercial business customers. The Zacks Rank # 3 company has an Earnings ESP of +3.33% for the first quarter of fiscal 2021.
Lowe's Companies has an expected earnings growth rate of 3.5% for the current year (ending January 2021). The Zacks Consensus Estimate for current-year earnings has improved 1.5% over the last 7 days. It has a trailing four-quarter positive earnings surprise of 1.7%, on average. The company is set to release earnings results on May 20, before the opening bell.
Alibaba Group Holding Ltd. (BABA - Free Report) provides online and mobile commerce businesses in the People's Republic of China and internationally. It operates in four segments: Core Commerce, Cloud Computing, Digital Media and Entertainment and Innovation Initiatives and Others. The Zacks Rank # 2 company has an Earnings ESP of +4.89% for the fourth quarter of fiscal 2020.
Alibaba Group Holding has an expected earnings growth rate of 28% for the current year (ending March 2020). It has a trailing four-quarter positive earnings surprise of 19.5%, on average. The company is set to release earnings results on May 22, before the opening bell.
Dollar General Corp. (DG - Free Report) is a discount retailer providing various products in across the United States. The Zacks Rank # 2 company has an Earnings ESP of +1.25% for the first quarter of fiscal 2021.
Dollar General has an expected earnings growth rate of 10.9% for the current year (ending January 2021). It has a trailing four-quarter positive earnings surprise of 5.9%, on average. The company is set to release earnings results on May 28, before the opening bell.
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This outperformance has not just been a recent phenomenon. From 2000 – 2019, while the S&P averaged +6.0% per year, our top strategies averaged up to +54.7% per year.
Image: Bigstock
5 Retailers Likely to Gain on Earnings This Month
A bulk of the retail sector is gearing up to report first-quarter earnings and a handful of companies from this space are set to beat earnings estimates this month. This raises optimism in an otherwise coronavirus-stricken reporting cycle.
Retail Sector Suffers Due to Pandemic
On Apr 15, the Commerce Department stated that U.S. retail and food services sales in March fell 8.7% to $483.1 billion, following a revised reading of a 0.4% decline in February. However, on May 15, the Commerce Department revised March retail sales to a decline of 8.3%. The unprecedented fall in March retail sales marked the largest monthly decline since the economic recession in November 2008.
The coronavirus pandemic has brought economic activities to a standstill leading to skyrocketing job losses and massive pay cuts. Consequently, this has resulted in sinking consumer confidence and dwindling household income, which have severely impacted spending activities and taken a toll on retailers. Notably, consumer spending constitutes 67% of the U.S. GDP.
Prolonged store closures, supply-chain disruptions, lower traffic trends and limited store operating hours in the wake of the pandemic have significantly impacted retail businesses. People are avoiding public places like restaurants, theaters and malls as social distancing has become the norm.
5 Retailers Set to Beat Earnings Estimates
Despite the overall disappointing earnings session, five retailers are poised to beat earnings estimates this month. Each of these stocks carries either a Zacks Rank #2 (Buy) or 3 (Hold) and has a positive Earnings ESP. You can see the complete list of today’s Zacks #1 Rank 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 expected to soar after 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 five stocks in the last quarter.
Advance Auto Parts Inc. (AAP - Free Report) provides automotive replacement parts, accessories, batteries, and maintenance items for domestic and imported cars, vans, sport utility vehicles, and light and heavy duty truck. The Zacks Rank # 3 company has an Earnings ESP of +13.98% for first-quarter 2020. Advance Auto Parts has a trailing four-quarter positive earnings surprise of 4.1%, on average. The company is set to release earnings results on May 19, before the opening bell.
The Home Depot Inc. (HD - Free Report) is the world’s largest home improvement specialty retailer offering a diverse range of branded and proprietary home improvement items, building materials, lawn and garden products and related services.. The Zacks Rank # 3 company has an Earnings ESP of +1.71% for the first quarter of fiscal 2021.
The Home Depot has a trailing four-quarter positive earnings surprise of 1.7%, on average. The Zacks Consensus Estimate for current-year earnings has improved 0.9% over the last 7 days. The company is set to release earnings results on May 19, before the opening bell.
Lowe's Companies Inc. (LOW - Free Report) is one of the world’s leading home improvement retailers, offering services to homeowners, renters and commercial business customers. The Zacks Rank # 3 company has an Earnings ESP of +3.33% for the first quarter of fiscal 2021.
Lowe's Companies has an expected earnings growth rate of 3.5% for the current year (ending January 2021). The Zacks Consensus Estimate for current-year earnings has improved 1.5% over the last 7 days. It has a trailing four-quarter positive earnings surprise of 1.7%, on average. The company is set to release earnings results on May 20, before the opening bell.
Alibaba Group Holding Ltd. (BABA - Free Report) provides online and mobile commerce businesses in the People's Republic of China and internationally. It operates in four segments: Core Commerce, Cloud Computing, Digital Media and Entertainment and Innovation Initiatives and Others. The Zacks Rank # 2 company has an Earnings ESP of +4.89% for the fourth quarter of fiscal 2020.
Alibaba Group Holding has an expected earnings growth rate of 28% for the current year (ending March 2020). It has a trailing four-quarter positive earnings surprise of 19.5%, on average. The company is set to release earnings results on May 22, before the opening bell.
Dollar General Corp. (DG - Free Report) is a discount retailer providing various products in across the United States. The Zacks Rank # 2 company has an Earnings ESP of +1.25% for the first quarter of fiscal 2021.
Dollar General has an expected earnings growth rate of 10.9% for the current year (ending January 2021). It has a trailing four-quarter positive earnings surprise of 5.9%, on average. The company is set to release earnings results on May 28, before the opening bell.
Today's Best Stocks from Zacks
Would you like to see the updated picks from our best market-beating strategies? From 2017 through 2019, while the S&P 500 gained and impressive +53.6%, five of our strategies returned +65.8%, +97.1%, +118.0%, +175.7% and even +186.7%.
This outperformance has not just been a recent phenomenon. From 2000 – 2019, while the S&P averaged +6.0% per year, our top strategies averaged up to +54.7% per year.
See their latest picks free >>