3 Big-Box Retailers to Watch for Earnings This Week
Second-quarter earnings reports from big-box retail players are on deck this week. From child tax credit to an array of government stimulus measures in recent times, all have undoubtedly put more money in consumers’ wallets. The big-box retailers are, thus, expected to have made the most of consumers’ spending spree in the second quarter. Of course, these companies must have performed well in the second quarter since the SPDR S&P Retail ETF is already up more than 50% so far this year.
Big-box retailers, in particular, have been able to utilize their abundant financial resources in handling the surge in online orders during the said quarter. In fact, big-box retailers introduced strategies like curbside pickup services to boost sales. Shoppers also remained cautious amid the coronavirus pandemic, reduced multiple visits to stores, and instead favored single stops at big-box retailers. No doubt, such moves boosted sales of the big-box retailers, which should get reflected in their second-quarter earnings results.
The improved macroeconomic backdrop in the second quarter has certainly been a tailwind to year-over-year sales of big-box retailers. After all, reopening of the economy increased consumers’ mobility in the second quarter, something that bodes well for big-box retailers, known for having large physical stores across the country.
Let us, thus, keep an eye on three of the big-box retailers whose earnings are about to roll out this week. Notably, the companies in discussion are Walmart Inc. WMT, The Home Depot, Inc. HD and Target Corporation TGT, and there isn’t any better group to judge the strength of U.S. consumers at the moment.
Walmart
The world’s largest retailer is set to report fiscal second-quarter results on Aug 17, before market open. The company’s sales in the second quarter are widely expected to outdo the figures raked in by rivals like Amazon.com Inc AMZN, thanks to federal stimulus measures, same-day delivery offers as well as added merchandise.
However, compared to the year-earlier period, Walmart’s sales figures might take a hit. This is because last year’s stay-in-place order immensely boosted its online sales, which may not be the case this time around due to the reopening of the economy.
The Zacks Consensus Estimate for Walmart’s fiscal second-quarter revenues is pegged at $136 billion, indicating a drop of nearly 1.3% year over year. The Zacks Consensus Estimate for earnings is at $1.56 a share, which by the way suggests no change in comparison to the year-ago period.
Home Depot
The home improvement retailer is poised to report fiscal second-quarter results on Aug 17, before market open. The pandemic, no doubt, has been a blessing in disguise for Home Depot. Mostly stuck at home, many Americans spent on home improvements, which has likely been a major plus for Home Depot in the second quarter. Needless to say, even if the economy recently reopened, many Americans stayed at home in the said quarter and maintained the work-from-home trend.
Nevertheless, the housing market has been more or less hot in the said quarter, and with more money in hand, consumers invested in new houses. This has certainly boosted Home Depot’s second-quarter performance.
The Zacks Consensus Estimate for Home Depot’s fiscal second-quarter revenues is projected at $40.68 billion, indicating a rise of 6.9% year over year. Similarly, the Zacks Consensus Estimate for earnings is pinned at $4.41 a share, calling for 9.7% year-over-year growth.
Target
The Minneapolis-based retailer is set to report fiscal second-quarter results on Aug 18, before market open. Target is expected to have performed much better than bigger players like Walmart in the second quarter.
This is because consumers are believed to have spent more on home furnishing products, apparel, and electronic devices in the second quarter banking on an improvement in their financial well-being. And these products are mostly sold at Target stores across the country. On the contrary, consumers are thought to have spent less on staple products, mostly found at Walmart stores.
Reopening of the economy, in the meantime, increased foot traffic in the second quarter, which undoubtedly bodes well for Target. Thus, the Zacks Consensus Estimate for Target’s fiscal second-quarter revenues is pegged at $24.97 billion, indicating a rise of almost 8.7% year over year. Similarly, the Zacks Consensus Estimate for earnings is pinned at $3.48 a share, indicating a rise of nearly 3% year over year.
While Walmart has a Zacks Rank #2 (Buy), Home Depot and Target at present have a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
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