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Wal-Mart (WMT - Free Report) kicks off the Q4 earnings season for the brick-and-mortar retail space, with the retail giant on track to release results Tuesday morning. The company has been in a league of its own lately, with many in the market viewing Wal-Mart as the most capable of all the traditional retailers to offer a competitive challenge to Amazon’s (AMZN - Free Report) ever-growing dominance of the retail space.
This ‘promise’ has been showing up in recent quarterly results, with the stock making significant gains following the quarterly release on November 16th when it showed impressive comps and handily beat expectations. The stock is up +52.1% over the past year, handily outperforming the +16.2% gain for Target (TGT - Free Report) and the industry’s +39.9% gain. Year-to-date, Wal-Mart shares are up +6.1%, compared to the S&P 500 index’s +2.2% gain.
Wal-Mart shares lost ground in the recent market sell-off, but have already recouped almost half of its losses. This shows a high level of confidence in the company’s Q4 report on Tuesday. The other major retailers and department stores will be reporting in the following week, though Home Depot (HD - Free Report) will also be reporting results on Tuesday.
Unlike Wal-Mart, Home Depot shares have been hit hard in the recent sell off and still remain under pressure. Home Depot shares are up +30.6% over the past year, but they are down -1.5% in the year-to-date period, likely reflecting fears of higher interest rates weighing on the broader housing sector.
Retail Sector Scorecard
As of Friday, February 16th, we now have Q4 results from 18 of the 39 retailers in the S&P 500 index. Total earnings for the 18 retailers that have reported already are up +13.1% from the same period last year on +14.6% higher revenues, with 72.2% beating EPS estimates and 77.8% beating revenue estimates.
Please note that we have a stand-alone Retail sector, unlike the official Standard & Poor’s placement of this space in their Consumer Discretionary sector. The Zacks Retail sector includes, besides the traditional department stores and other brick-and-mortar retailers, the online vendors like Amazon and Priceline and restaurant operators. Results from the online vendors and most of the restaurant operators are already behind us at this stage and form part of the scorecard described here. Wal-Mart and Home Depot will be the first in the traditional brick-and-mortar space coming out with results.
The side-by-side charts below compare the sector’s results thus far with what we have seen from the same group of 18 retailers in other recent periods.
This is better performance than we have seen from this same group Retail sector stocks in other recent periods. But as mentioned earlier, all of these results are from the online vendors and restaurant operators, the traditional operators have yet to come out with Q4 results. We will see if these comparisons will still remain favorable after we see their results.
Rising 2018 Q1 Estimates
The chart below that we have been sharing here since the Q4 earnings season got underway shows a trend that we haven’t seen in years; definitely not since 2011.
What this chart shows is that earnings growth expectations for 2018 Q1 have moved up significantly since mid-December 2017. And it’s not just 2018 Q1 estimates that are going, estimates for the following quarters and full-year 2018 are also going up.
The chart below shows how estimates for full-year 2018 have evolved over the last few months.
Impressively, the revisions trend is broad-based and not concentrated in one or a few sectors. Of the 16 Zacks sectors, Q1 estimates have gone up for 13 sectors. The only sectors where estimates have come down include the Conglomerates, Autos and Consumer Staples.
Q4 Earnings Season Scorecard (as of Friday, February 16, 2018)
Total earnings for the 398 S&P 500 members that have reported results already are up +14.5% from the same period last year on +9% higher revenues, with 77.9% beating EPS estimates and 75.6% beating revenue estimates. The proportion of companies beating both EPS and revenue estimates is 62.1%.
To put these results in a historical context, the charts below compare the results thus far with what we had seen from the same group of 398 index members in other recent periods.
Any way you look at these results, the Q4 earnings season is on track to be very good. Not only is growth tracking above what we had seen from the same group of 398 index members, but a record proportion are beating EPS and revenue estimates.
The comparison charts below highlight the very strong revenue momentum that’s coming out of the Q4 earnings season, a truly impressive performance.
Expectations for Q4 As a Whole
Looking at Q4 as a whole, combining the actual results from the 398 index members with estimates from the still-to-come 102 companies, total earnings are expected to be up +14% from the same period last year on +8.2% higher revenues. This would follow +6.7% earnings growth in 2017 Q3 on +5.8% growth in revenues. This will be the highest quarterly growth rate in years.
The table below shows the summary picture for Q4, contrasted with what was actually achieved in Q3.
The chart below shows Q4 earnings growth expectations contrasted with what is expected in the following three quarters and actual results in the preceding 5 quarters. As you can see in the chart below, the growth pace is expected to pick up in Q4 after dipping in the preceding quarter and continue accelerating going forward.
The Small-Cap Scorecard – S&P 600 Index
For the S&P 600 index, we now have Q4 results from 294 index members or 48.9% of the index’s total membership. Total earnings for these 294 index members are up +14.3% from the same period last year on +11.1% higher revenues, with 69.7% beating EPS estimates and 71.4% beating revenue estimates.
The charts below compare the results thus far with what we had seen from the same group of 294 index members in other recent periods.
The table below shows the blended picture, combining the actual results that have come out with estimates for the still-to-come companies, for Q4 for the small-cap index.
The chart below puts the small-cap index’s expected Q4 performance in the context of where growth has come from and where it is expected to go in the coming quarters.
Note: Sheraz Mian manages the Zacks equity research department. He is an acknowledged earnings expert whose commentaries and analyses appear on Zacks.com and in the print and electronic media. His weekly earnings related articles include Earnings Trends and Earnings Preview. He manages the Zacks Top 10 and Focus List portfolios and writes the Weekly Market Analysis article for Zacks Premium subscribers.
Zacks Top 10 Stocks for 2018
In addition to the stocks discussed above, would you like to know about our 10 finest buy-and-hold tickers for the entirety of 2018?
Last year's 2017 Zacks Top 10 Stocks portfolio produced double-digit winners, including FMC Corp. and VMware which racked up stellar gains of +67.9% and +61%. Now a brand-new portfolio has been handpicked from over 4,000 companies covered by the Zacks Rank. Don’t miss your chance to get in on these long-term buys.
Image: Bigstock
What Will Retail Earnings Show?
Wal-Mart (WMT - Free Report) kicks off the Q4 earnings season for the brick-and-mortar retail space, with the retail giant on track to release results Tuesday morning. The company has been in a league of its own lately, with many in the market viewing Wal-Mart as the most capable of all the traditional retailers to offer a competitive challenge to Amazon’s (AMZN - Free Report) ever-growing dominance of the retail space.
This ‘promise’ has been showing up in recent quarterly results, with the stock making significant gains following the quarterly release on November 16th when it showed impressive comps and handily beat expectations. The stock is up +52.1% over the past year, handily outperforming the +16.2% gain for Target (TGT - Free Report) and the industry’s +39.9% gain. Year-to-date, Wal-Mart shares are up +6.1%, compared to the S&P 500 index’s +2.2% gain.
Wal-Mart shares lost ground in the recent market sell-off, but have already recouped almost half of its losses. This shows a high level of confidence in the company’s Q4 report on Tuesday. The other major retailers and department stores will be reporting in the following week, though Home Depot (HD - Free Report) will also be reporting results on Tuesday.
Unlike Wal-Mart, Home Depot shares have been hit hard in the recent sell off and still remain under pressure. Home Depot shares are up +30.6% over the past year, but they are down -1.5% in the year-to-date period, likely reflecting fears of higher interest rates weighing on the broader housing sector.
Retail Sector Scorecard
As of Friday, February 16th, we now have Q4 results from 18 of the 39 retailers in the S&P 500 index. Total earnings for the 18 retailers that have reported already are up +13.1% from the same period last year on +14.6% higher revenues, with 72.2% beating EPS estimates and 77.8% beating revenue estimates.
Please note that we have a stand-alone Retail sector, unlike the official Standard & Poor’s placement of this space in their Consumer Discretionary sector. The Zacks Retail sector includes, besides the traditional department stores and other brick-and-mortar retailers, the online vendors like Amazon and Priceline and restaurant operators. Results from the online vendors and most of the restaurant operators are already behind us at this stage and form part of the scorecard described here. Wal-Mart and Home Depot will be the first in the traditional brick-and-mortar space coming out with results.
The side-by-side charts below compare the sector’s results thus far with what we have seen from the same group of 18 retailers in other recent periods.
This is better performance than we have seen from this same group Retail sector stocks in other recent periods. But as mentioned earlier, all of these results are from the online vendors and restaurant operators, the traditional operators have yet to come out with Q4 results. We will see if these comparisons will still remain favorable after we see their results.
Rising 2018 Q1 Estimates
The chart below that we have been sharing here since the Q4 earnings season got underway shows a trend that we haven’t seen in years; definitely not since 2011.
What this chart shows is that earnings growth expectations for 2018 Q1 have moved up significantly since mid-December 2017. And it’s not just 2018 Q1 estimates that are going, estimates for the following quarters and full-year 2018 are also going up.
The chart below shows how estimates for full-year 2018 have evolved over the last few months.
Impressively, the revisions trend is broad-based and not concentrated in one or a few sectors. Of the 16 Zacks sectors, Q1 estimates have gone up for 13 sectors. The only sectors where estimates have come down include the Conglomerates, Autos and Consumer Staples.
Q4 Earnings Season Scorecard (as of Friday, February 16, 2018)
Total earnings for the 398 S&P 500 members that have reported results already are up +14.5% from the same period last year on +9% higher revenues, with 77.9% beating EPS estimates and 75.6% beating revenue estimates. The proportion of companies beating both EPS and revenue estimates is 62.1%.
To put these results in a historical context, the charts below compare the results thus far with what we had seen from the same group of 398 index members in other recent periods.
Any way you look at these results, the Q4 earnings season is on track to be very good. Not only is growth tracking above what we had seen from the same group of 398 index members, but a record proportion are beating EPS and revenue estimates.
The comparison charts below highlight the very strong revenue momentum that’s coming out of the Q4 earnings season, a truly impressive performance.
Expectations for Q4 As a Whole
Looking at Q4 as a whole, combining the actual results from the 398 index members with estimates from the still-to-come 102 companies, total earnings are expected to be up +14% from the same period last year on +8.2% higher revenues. This would follow +6.7% earnings growth in 2017 Q3 on +5.8% growth in revenues. This will be the highest quarterly growth rate in years.
The table below shows the summary picture for Q4, contrasted with what was actually achieved in Q3.
The chart below shows Q4 earnings growth expectations contrasted with what is expected in the following three quarters and actual results in the preceding 5 quarters. As you can see in the chart below, the growth pace is expected to pick up in Q4 after dipping in the preceding quarter and continue accelerating going forward.
The Small-Cap Scorecard – S&P 600 Index
For the S&P 600 index, we now have Q4 results from 294 index members or 48.9% of the index’s total membership. Total earnings for these 294 index members are up +14.3% from the same period last year on +11.1% higher revenues, with 69.7% beating EPS estimates and 71.4% beating revenue estimates.
The charts below compare the results thus far with what we had seen from the same group of 294 index members in other recent periods.
The table below shows the blended picture, combining the actual results that have come out with estimates for the still-to-come companies, for Q4 for the small-cap index.
The chart below puts the small-cap index’s expected Q4 performance in the context of where growth has come from and where it is expected to go in the coming quarters.
Note: Sheraz Mian manages the Zacks equity research department. He is an acknowledged earnings expert whose commentaries and analyses appear on Zacks.com and in the print and electronic media. His weekly earnings related articles include Earnings Trends and Earnings Preview. He manages the Zacks Top 10 and Focus List portfolios and writes the Weekly Market Analysis article for Zacks Premium subscribers.
Zacks Top 10 Stocks for 2018
In addition to the stocks discussed above, would you like to know about our 10 finest buy-and-hold tickers for the entirety of 2018?
Last year's 2017 Zacks Top 10 Stocks portfolio produced double-digit winners, including FMC Corp. and VMware which racked up stellar gains of +67.9% and +61%. Now a brand-new portfolio has been handpicked from over 4,000 companies covered by the Zacks Rank. Don’t miss your chance to get in on these long-term buys.
Access Zacks Top 10 Stocks for 2018 today >>
Here is a list of the 455 companies including 54 S&P 500 and reporting this week.