Zacks Earnings Preview: Wal-Mart, Macy's, Nordstrom, Cisco and Deere & Co.


For Immediate Release

Chicago, IL- May 13, 2013– releases the list of companies likely to issue earnings surprises. This week’s list includes Wal-Mart (WMT), Macy’s (M), Nordstrom (JWN), Cisco (CSCO) and Deere & Co. (DE).

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Focus Shifts to Retail Earnings

The Q1 earnings season is over for most of the major sectors, with the Retail sector as the only one that has a significant number of reports still awaited.

As such, Retail has a heavy presence in this week’s earnings reports, including industry heavyweights like Wal-Mart (WMT), Macy’s (M) and Nordstrom (JWN). But we do have couple of bellwether operators coming out with results this week from other sectors, like Cisco (CSCO) and Deere & Co. (DE). In total, we will get Q1 earnings reports from 127 companies this week, including 11 S&P 500 members.

Total Retail thus far are up +11.2% from the period last year, on 2.6% higher revenues. Combining the Retail sector earnings for the 25 companies that have come out with the 22 still to come, the sector’s total earnings in Q1 should be up +3.6%. This compares to earnings growth rates of +8.1% and +6.1% in 2012 Q4 and Q3, respectively. April same-store sales data for the sector has generally been on the soft side, with industry players citing colder temperatures in April as a reason for light traffic. But it could very well be that the payroll tax changes in January are finally starting to have an effect

We continue to grade the Q1 earnings season as between ‘average’ and ‘below average’ – it’s definitely neither ‘good’ nor ‘bad,’ not materially different from what we have been seeing over the last few earnings seasons. That said, the overall level of ‘total’ quarterly earnings is at a record level.

The Q1 Earnings Scorecard

The earnings season has come to an end for 9 of the 16 sectors and except for Retail, the other sectors are close to or more than 90% done as well. A couple of things stand out in the Q1 results: the pronounced negative revenue surprises and the weakness in the Technology sector.

The Technology sector’s growth rates and ‘beat ratios’ are weaker than the same for the S&P 500 as well as what the group reported in 2012 Q4. With 88.5% of the sector’s total market capitalization already out with Q1 results, total earnings for the sector are down -4.4%, with 63.2% of the sector companies beating earnings expectations (vs. the S&P 500 average of 65.3%). The revenue side for the sector isn’t that bad (up +5.7%), which goes on to spotlight the sector’s margin problems.

The composite growth rate for Q1, where we combine the results of the 453 companies that have come out with results with the 47 still to come, is for a rise of +2.4% in total earnings on -0.8% lower revenues. In terms of dollar earnings levels, composite earnings in Q1 total $251.6 billion, the highest quarterly total since the current earnings cycle started back in 2009 (is that why the market is at a new all-time high as well?)

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Read the analyst report on WMT

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Read the analyst report on JWN

Read the analyst report on CSCO

Read the analyst report on DE

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