We use cookies to understand how you use our site and to improve your experience. This includes personalizing content and advertising. To learn more, click here. By continuing to use our site, you accept our use of cookies, revised Privacy Policy and Terms of Service.
You are being directed to ZacksTrade, a division of LBMZ Securities and licensed broker-dealer. ZacksTrade and Zacks.com are separate companies. The web link between the two companies is not a solicitation or offer to invest in a particular security or type of security. ZacksTrade does not endorse or adopt any particular investment strategy, any analyst opinion/rating/report or any approach to evaluating individual securities.
If you wish to go to ZacksTrade, click OK. If you do not, click Cancel.
Zacks Earnings Trends Highlights: Target and TJX Companies
Read MoreHide Full Article
For Immediate Release
Chicago, IL – August 31, 2023– Zacks Director of Research Sheraz Mian says, "Q2 was the 3rd consecutive quarter of earnings declines. The expectation is for 2023 Q3 earnings to be the last period of decline, with growth resuming from Q4 onwards."
A Positive Earnings Trend Emerges
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 overall earnings picture remains stable and resilient, with the outlook beginning to improve in recent months. The revisions trend has notably stabilized lately, with estimates for several key sectors increasing.
This evolving earnings outlook remains inconsistent with the long-feared 'earnings cliff' narrative.
Q2 was the 3rd consecutive quarter of earnings declines. The expectation is for 2023 Q3 earnings to be the last period of decline, with growth resuming from Q4 onwards.
For 2023 Q3, S&P 500 earnings are currently expected to be down -1.5% on +0.7% higher revenues. Excluding the Energy sector, Q3 earnings for the rest of the index would be up +3.4% on +3.2% higher revenues.
The somewhat mixed showing from the traditional retailers in their Q2 earnings reports was primarily due to management execution and less a function of any significant moderation in consumer spending.
We discussed Target (TGT - Free Report) in recent days, which missed top-line and comp estimates but did better on margins and inventories. We noted that while management appeared satisfied with current inventory levels, investors will be justified in wondering whether Target has really addressed the issue if Q2's weak sales and traffic trends will result in unsold inventory in the coming periods.
Unlike Walmart, whose quarterly report showed all-around strength, Target has struggled in the post-Covid period, failing to foresee shifts in consumer spending away from discretionary categories like apparel, home furnishings, and electronics, resulting in unsold inventory that then needed to be cleared through markdowns.
Walmart stumbled last year following its Q1 report, as did Target, but it recovered quickly. In its Q2 report, Walmart benefited from broad market share gains and momentum in key growth initiatives.
While Walmart has a much bigger grocery business, Target has all along been seen as more of a play on discretionary merchandise, demand for which has moderated in the post-Covid period. That said, Target appears to have lost out more than other retailers that sell comparable merchandise, with TJX Companies (TJX - Free Report) as a good example of one such retailer.
The challenge for retailers like Target, Walmart, TJX, and others is not only to have the correct merchandise but also to deal with higher expenses related to freight, payroll, and other items.
We have provided the updated Q2 earnings season scorecard for the Zacks Retail sector in the detailed report.
Beyond the Retail sector, the 2023 Q2 reporting cycle has come to an end for 11 of the 16 Zacks sectors, with results from 98.4% of the S&P 500 index companies already out.
2023 Q2 is on track to be the third consecutive quarter of declining S&P 500 earnings. The expectation currently is for another earnings decline in Q3 of -1.5%, after which growth turns positive in Q4 and continues in 2024. In fact, Q3 earnings would be positive had it not been for the Energy sector drag.
The long-feared recession doesn't show up in this near-term earnings outlook. A big-picture view of corporate profitability on a long-term basis doesn't leave much room for a recession either.
These growth expectations reflect current bottom-up consensus earnings estimates for the individual S&P 500 companies that, in turn, are based on the estimates from individual sell-side analysts that cover those companies.
Regular readers of our earnings commentary know that we have flagged a notable stabilization in the estimate revisions trend since the start of 2023 Q2, reversing the persistently negative trend that had been in place for almost a year prior.
Earnings estimates in the aggregate for the S&P 500 index have come down only a touch since the start of April, with a number of key sectors starting to see modest positive estimate revisions. These sectors include Construction, Industrial Products, Autos, Tech, Medical, and Retail. These trends have been confirmed and strengthened by the Q2 earnings results and management's guidance and commentary for the current and coming quarters.
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.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.
See More Zacks Research for These Tickers
Normally $25 each - click below to receive one report FREE:
Image: Bigstock
Zacks Earnings Trends Highlights: Target and TJX Companies
For Immediate Release
Chicago, IL – August 31, 2023– Zacks Director of Research Sheraz Mian says, "Q2 was the 3rd consecutive quarter of earnings declines. The expectation is for 2023 Q3 earnings to be the last period of decline, with growth resuming from Q4 onwards."
A Positive Earnings Trend Emerges
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 somewhat mixed showing from the traditional retailers in their Q2 earnings reports was primarily due to management execution and less a function of any significant moderation in consumer spending.
We discussed Target (TGT - Free Report) in recent days, which missed top-line and comp estimates but did better on margins and inventories. We noted that while management appeared satisfied with current inventory levels, investors will be justified in wondering whether Target has really addressed the issue if Q2's weak sales and traffic trends will result in unsold inventory in the coming periods.
Unlike Walmart, whose quarterly report showed all-around strength, Target has struggled in the post-Covid period, failing to foresee shifts in consumer spending away from discretionary categories like apparel, home furnishings, and electronics, resulting in unsold inventory that then needed to be cleared through markdowns.
Walmart stumbled last year following its Q1 report, as did Target, but it recovered quickly. In its Q2 report, Walmart benefited from broad market share gains and momentum in key growth initiatives.
While Walmart has a much bigger grocery business, Target has all along been seen as more of a play on discretionary merchandise, demand for which has moderated in the post-Covid period. That said, Target appears to have lost out more than other retailers that sell comparable merchandise, with TJX Companies (TJX - Free Report) as a good example of one such retailer.
The challenge for retailers like Target, Walmart, TJX, and others is not only to have the correct merchandise but also to deal with higher expenses related to freight, payroll, and other items.
We have provided the updated Q2 earnings season scorecard for the Zacks Retail sector in the detailed report.
Beyond the Retail sector, the 2023 Q2 reporting cycle has come to an end for 11 of the 16 Zacks sectors, with results from 98.4% of the S&P 500 index companies already out.
2023 Q2 is on track to be the third consecutive quarter of declining S&P 500 earnings. The expectation currently is for another earnings decline in Q3 of -1.5%, after which growth turns positive in Q4 and continues in 2024. In fact, Q3 earnings would be positive had it not been for the Energy sector drag.
The long-feared recession doesn't show up in this near-term earnings outlook. A big-picture view of corporate profitability on a long-term basis doesn't leave much room for a recession either.
These growth expectations reflect current bottom-up consensus earnings estimates for the individual S&P 500 companies that, in turn, are based on the estimates from individual sell-side analysts that cover those companies.
Regular readers of our earnings commentary know that we have flagged a notable stabilization in the estimate revisions trend since the start of 2023 Q2, reversing the persistently negative trend that had been in place for almost a year prior.
Earnings estimates in the aggregate for the S&P 500 index have come down only a touch since the start of April, with a number of key sectors starting to see modest positive estimate revisions. These sectors include Construction, Industrial Products, Autos, Tech, Medical, and Retail. These trends have been confirmed and strengthened by the Q2 earnings results and management's guidance and commentary for the current and coming quarters.
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.
See Stocks Free >>
Media Contact
Zacks Investment Research
800-767-3771 ext. 9339
support@zacks.com
https://www.zacks.com
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.