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Zacks Earnings Trends Highlights: Walmart, Home Depot, Amazon
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For Immediate Release
Chicago, IL – February 23, 2023– Zacks Director of Research Sheraz Mian says, "Had it not been for the -18.0% drag from the Tech sector, Q4 earnings for the rest of the S&P 500 index would be up +0.7% from the year-earlier level."
Exploring the Retail Sector, Looking Ahead to 2023 Earnings
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:
For the 429 S&P 500 companies that have reported Q4 results, total earnings are down -5.1% from the same period last year on +5.9% higher revenues, with 70.9% beating EPS estimates and 71.1% beating revenue estimates.
Had it not been for the -18.0% drag from the Tech sector, Q4 earnings for the rest of the S&P 500 index would be up +0.7% from the year-earlier level.
Looking at 2022 Q4 as a whole, aggregate S&P 500 earnings are currently expected to be down -5.7% on +5.7% higher revenues. Excluding the Energy sector's strong contribution, Q4 earnings for the rest of the index are expected to be down -9.6% on +4.7% higher revenues.
For 2023 Q1, S&P 500 earnings are currently expected to be down -8.5% on +2.1% higher revenues. This is down from -4% on January 6th and -2.9% in mid-December 2022.
Earnings estimates for full-year 2023 have been coming down as well. From their peak in mid-April 2022, the aggregate total for the year has been cut by -12.1% for the index as a whole and -14.3% excluding the Energy sector's contribution.
The only remaining points of interest in the 2022 Q4 reporting cycle pertain to results from traditional retailers, with Walmart (WMT - Free Report) and Home Depot (HD - Free Report) already out and the others on deck to report in the coming days.
The market liked the Walmart report, even though the company provided weak(ish) guidance. The favorable reception for the Walmart report reflected appreciation for management execution in a tough operating environment, particularly with respect to inventories, and the company's continued market share gains that partly drove the strong comparable sales growth during the holidays.
The market likely sees Walmart's weak guidance as nothing more than conservatism on management's part. We don't see anything wrong with this interpretation, particularly since we find ourselves in the so-called soft-landing camp. Simply put, Walmart's guidance reflects a degree of moderation and weakness in the consumer that is somewhat at odds with a less-worrisome macroeconomic outcome.
Regular readers know that we have a distinct stand-alone sector for the Retail sector, unlike the (official) Standard & Poor's GICS that houses retailers in the Consumer Discretionary and Consumer Staples sectors. We feel that our dedicated Retail sector classification allows us a more nuanced appreciation of evolving trends, but you will justifiably call our views on the subject as biased.
The Zacks Retail sector is a fairly broad grouping that not only includes the likes of Walmart and Home Depot, but also digital players like Amazon (AMZN - Free Report) and restaurant operators. All of these digital and restaurant players have already reported their Q4 results, with mostly the traditional players still to come at this stage.
We have included a full scorecard of the Zacks Retail sector in the body of this report.
The Earnings Big Picture
For the current period (2023 Q1), S&P 500 earnings are currently expected to decline -8.5% from the same period last year on +2% higher revenues.
As has been the case over the few quarters, estimates for 2023 Q1 have been steadily coming down.
Please note that the magnitude of cuts to Q1 estimates is relatively lower compared to what we saw in the comparable periods for the last few quarters.
As noted earlier, the current aggregate earnings total for the index approximates to an index 'EPS' of $215.65, lower than last week's $215.97 and down big from $242.98 in mid-April, 2022.
Expectations for the Coming Periods
Earnings this year are now expected to be down -0.1%. This can hardly be called out-of-sync with a flat or even modestly down economic growth outlook. Don't forget that headline GDP growth numbers are in real or inflation-adjusted terms while S&P 500 earnings discussed here are not.
As mentioned earlier, 2023 aggregate earnings estimates on an ex-Energy basis are already down by more than -14% since mid-April 2022. Perhaps we see a bit more downward adjustments to estimates over the coming weeks, after more companies report Q4 results and provide guidance along the lines of what we saw with Microsoft. But we have nevertheless already covered some ground in taking estimates to a fair or appropriate level.
This is particularly so if whatever economic downturn lies ahead proves to be more of the garden variety rather than the last two such events. Recency bias forces us to use the last two economic downturns, which were also among the nastiest in recent history, as our reference points. But we need to be cautious against that natural tendency as the economy's foundations at present remain unusually strong.
Why Haven't You Looked at Zacks' Top Stocks?
Since 2000, our top stock-picking strategies have blown away the S&P's +6.2 average gain per year. Amazingly, they soared with average gains of +46.4%, +49.5% and +55.2% per year. Today you can access their live picks without cost or obligation.
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 https://www.zacks.com/performancefor information about the performance numbers displayed in this press release.
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Zacks Earnings Trends Highlights: Walmart, Home Depot, Amazon
For Immediate Release
Chicago, IL – February 23, 2023– Zacks Director of Research Sheraz Mian says, "Had it not been for the -18.0% drag from the Tech sector, Q4 earnings for the rest of the S&P 500 index would be up +0.7% from the year-earlier level."
Exploring the Retail Sector, Looking Ahead to 2023 Earnings
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:
The only remaining points of interest in the 2022 Q4 reporting cycle pertain to results from traditional retailers, with Walmart (WMT - Free Report) and Home Depot (HD - Free Report) already out and the others on deck to report in the coming days.
The market liked the Walmart report, even though the company provided weak(ish) guidance. The favorable reception for the Walmart report reflected appreciation for management execution in a tough operating environment, particularly with respect to inventories, and the company's continued market share gains that partly drove the strong comparable sales growth during the holidays.
The market likely sees Walmart's weak guidance as nothing more than conservatism on management's part. We don't see anything wrong with this interpretation, particularly since we find ourselves in the so-called soft-landing camp. Simply put, Walmart's guidance reflects a degree of moderation and weakness in the consumer that is somewhat at odds with a less-worrisome macroeconomic outcome.
Regular readers know that we have a distinct stand-alone sector for the Retail sector, unlike the (official) Standard & Poor's GICS that houses retailers in the Consumer Discretionary and Consumer Staples sectors. We feel that our dedicated Retail sector classification allows us a more nuanced appreciation of evolving trends, but you will justifiably call our views on the subject as biased.
The Zacks Retail sector is a fairly broad grouping that not only includes the likes of Walmart and Home Depot, but also digital players like Amazon (AMZN - Free Report) and restaurant operators. All of these digital and restaurant players have already reported their Q4 results, with mostly the traditional players still to come at this stage.
We have included a full scorecard of the Zacks Retail sector in the body of this report.
The Earnings Big Picture
For the current period (2023 Q1), S&P 500 earnings are currently expected to decline -8.5% from the same period last year on +2% higher revenues.
As has been the case over the few quarters, estimates for 2023 Q1 have been steadily coming down.
Please note that the magnitude of cuts to Q1 estimates is relatively lower compared to what we saw in the comparable periods for the last few quarters.
As noted earlier, the current aggregate earnings total for the index approximates to an index 'EPS' of $215.65, lower than last week's $215.97 and down big from $242.98 in mid-April, 2022.
Expectations for the Coming Periods
Earnings this year are now expected to be down -0.1%. This can hardly be called out-of-sync with a flat or even modestly down economic growth outlook. Don't forget that headline GDP growth numbers are in real or inflation-adjusted terms while S&P 500 earnings discussed here are not.
As mentioned earlier, 2023 aggregate earnings estimates on an ex-Energy basis are already down by more than -14% since mid-April 2022. Perhaps we see a bit more downward adjustments to estimates over the coming weeks, after more companies report Q4 results and provide guidance along the lines of what we saw with Microsoft. But we have nevertheless already covered some ground in taking estimates to a fair or appropriate level.
This is particularly so if whatever economic downturn lies ahead proves to be more of the garden variety rather than the last two such events. Recency bias forces us to use the last two economic downturns, which were also among the nastiest in recent history, as our reference points. But we need to be cautious against that natural tendency as the economy's foundations at present remain unusually strong.
Why Haven't You Looked at Zacks' Top Stocks?
Since 2000, our top stock-picking strategies have blown away the S&P's +6.2 average gain per year. Amazingly, they soared with average gains of +46.4%, +49.5% and +55.2% per year. Today you can access their live picks without cost or obligation.
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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/performancefor information about the performance numbers displayed in this press release.