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Zacks Earnings Trends Highlights: Target and Walmart
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For Immediate Release
Chicago, IL – August 22, 2024 – Zacks Director of Research Sheraz Mian says, "For the 473 S&P 500 companies that have reported Q2 results, total earnings are up +8.0% from the same period last year on +5.0% higher revenues."
Breaking Down Retail Earnings: Good or Bad?
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 Q2 earnings season produced an overall stable picture of corporate profitability, with management teams generally providing a reassuring view of the economic ground reality. That said, question marks have emerged about the outlook, as estimates for the current period have weakened more than what we saw in the last two periods.
For the 473 S&P 500 companies that have reported Q2 results, or 94.6% of the index’s total membership, total earnings are up +8.0% from the same period last year on +5.0% higher revenues, with 79.7% beating EPS estimates and 59.8% beating revenue estimates.
For the Retail sector, we now have Q2 results from 96.2% of the sector’s market capitalization in the S&P 500 index. Total earnings for these companies are up +17.3% from the same period last year on +4.8% higher revenues, with 62.1% beating EPS estimates and 44.8% beating revenue estimates.
This is a weaker performance relative to what we have seen from these Retail companies in other recent periods, with Q2 earnings growth turning negative when Amazon’s results are excluded from the sector numbers. The Q2 EPS and revenue beats percentages for this group of Retail companies is a new low over the preceding 20-quarter period.
The earnings focus in recent days has been on the Retail sector, with Target (TGT - Free Report) coming out with a big beat on same-store sales (comps), earnings, and positive earnings guidance. Target shares were up big on the resumption of positive comps after several quarters of declines, with favorable demand trends for a number of its discretionary merchandise. This confirmed the positive trends that we saw in the non-essential categories in Walmart’s (WMT - Free Report) beat-and-raise quarterly report a few days back.
Target shares have lagged Walmart in a major way, reflecting the company’s heavy exposure to discretionary merchandise; Walmart has benefited from its heavy exposure to groceries and other essentials.
We have discussed the Retail sector’s earnings scorecard and how the sector’s Q2 results stack up relative to the other recent periods in section 1 of this report.
The Earnings Big Picture
For the current period (2024 Q3), total S&P 500 earnings are expected to be up +3.9% from the same period last year on +4.6% higher revenues. Estimates have come down since the quarter got underway.
This is a bigger decline to estimates relative to the comparable periods for the two preceding quarters. The negative revisions trend is widespread and not concentrated in one or two sectors, with estimates for 14 of the 16 Zacks sectors getting cut over this period. The Tech and Finance sectors are the only ones enjoying positive estimate revisions over this period.
Please note that this year’s +8.0% earnings growth on only +1.8% top-line gains reflects revenue weakness in the Finance sector. Excluding the Finance sector, the earnings growth pace changes to +7.5%, and the revenue growth rate improves to +4.2%. In other words, about half of this year’s earnings growth comes from revenue growth, with margin gains accounting for the rest.
On the margins front, 11 of the 16 Zacks sectors are expected to have higher margins in 2024 relative to last year, with Tech, Finance, and Consumer Discretionary as the big gainers.
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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/performance for information about the performance numbers displayed in this press release.
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Zacks Earnings Trends Highlights: Target and Walmart
For Immediate Release
Chicago, IL – August 22, 2024 – Zacks Director of Research Sheraz Mian says, "For the 473 S&P 500 companies that have reported Q2 results, total earnings are up +8.0% from the same period last year on +5.0% higher revenues."
Breaking Down Retail Earnings: Good or Bad?
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 earnings focus in recent days has been on the Retail sector, with Target (TGT - Free Report) coming out with a big beat on same-store sales (comps), earnings, and positive earnings guidance. Target shares were up big on the resumption of positive comps after several quarters of declines, with favorable demand trends for a number of its discretionary merchandise. This confirmed the positive trends that we saw in the non-essential categories in Walmart’s (WMT - Free Report) beat-and-raise quarterly report a few days back.
Target shares have lagged Walmart in a major way, reflecting the company’s heavy exposure to discretionary merchandise; Walmart has benefited from its heavy exposure to groceries and other essentials.
We have discussed the Retail sector’s earnings scorecard and how the sector’s Q2 results stack up relative to the other recent periods in section 1 of this report.
The Earnings Big Picture
For the current period (2024 Q3), total S&P 500 earnings are expected to be up +3.9% from the same period last year on +4.6% higher revenues. Estimates have come down since the quarter got underway.
This is a bigger decline to estimates relative to the comparable periods for the two preceding quarters. The negative revisions trend is widespread and not concentrated in one or two sectors, with estimates for 14 of the 16 Zacks sectors getting cut over this period. The Tech and Finance sectors are the only ones enjoying positive estimate revisions over this period.
Please note that this year’s +8.0% earnings growth on only +1.8% top-line gains reflects revenue weakness in the Finance sector. Excluding the Finance sector, the earnings growth pace changes to +7.5%, and the revenue growth rate improves to +4.2%. In other words, about half of this year’s earnings growth comes from revenue growth, with margin gains accounting for the rest.
On the margins front, 11 of the 16 Zacks sectors are expected to have higher margins in 2024 relative to last year, with Tech, Finance, and Consumer Discretionary as the big gainers.
Why Haven't You Looked at Zacks' Top Stocks?
Since 2000, our top stock-picking strategies have blown away the S&P's +7.0 average gain per year. Amazingly, they soared with average gains of +44.9%, +48.4% and +55.2% per year.
Today you can access their live picks without cost or obligation.
See Stocks Free >>
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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/performance for information about the performance numbers displayed in this press release.