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7 Retail Behemoths Likely to Win Big on Q2 Earnings This Week

Nalak Das
·5 min read

We are in the last round of the coronavirus-stricken second-quarter 2020 earnings season, with retail corporate giants lined up to report this week.

A Brief Review of the Retail Sector in Q2

Last quarter was a mixed one for retailers. In April, retail sales plunged by 14.7% as the global outbreak of coronavirus forced the U.S. government to impose lockdowns in order to curb the spread of the deadly virus. A jump in online sales failed to mitigate the decline in store sales as most of the stores remained closed.

Nevertheless, retail sales rebounded 18.2% in May and 8.4% in June buoyed by the systematic reopening of economies in all 50 states. Gradually, people started visiting retail stores. Moreover, the decision taken by the Trump administration to provide a $600 per week unemployment benefit to individuals helped a lot in restoring consumer spending.

However, the emergence of the second wave of COVID-19 since mid-June dampened consumers' confidence. Finally, second-quarter retail sales on average remained well below the pre-pandemic period in February.

7 Retail Giants Likely to Beat Earnings Estimates

We have narrowed down our search to seven large-cap (market capital > $10 billion) retail stocks that are slated to report earnings results this week. Each of these stocks carries a Zacks Rank #3 (Hold) and has a positive Earnings ESP. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Our research shows that for stocks with the combination of a Zacks Rank #3 or better and a positive Earnings ESP, the chance of an earnings beat is as high as 70%. These stocks are expected to soar after earnings release. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

The chart below shows the price performance of seven retail behemoths in the last quarter.

Walmart Inc. WMT operates retail stores, restaurants, discount stores, supermarkets, supercenters, hypermarkets, warehouse clubs, apparel stores, NeighborhoodMarkets and Sam’s Club as well as the websites, walmart.com and samsclub.com.

The company has an Earnings ESP of +1.67% for the second quarter of fiscal 2021 (ended July 2020). It has a trailing four-quarter earnings surprise of 3.6%, on average. Walmart will release earnings report on Aug 18, before the opening bell.

The Home Depot Inc. HD is the world’s largest home improvement specialty retailer with over 2,200 retail stores across the globe, offering a diverse range of branded and proprietary home improvement items, building materials, lawn and garden products, and related services. The company has an Earnings ESP of +5.79% for the second quarter of fiscal 2020 (ended July 2020).

The Home Depot has an expected earnings growth rate of 3.8% for the current year (ending January 2021). The Zacks Consensus Estimate for current-year earnings has improved 4.6% over the last 7 days. It has a trailing four-quarter earnings surprise of 0.8%, on average. The company will release earnings report on Aug 18, before the opening bell.

Advance Auto Parts Inc. AAP provides automotive replacement parts, accessories, batteries, and maintenance items for domestic and imported cars, vans, sport utility vehicles, and light and heavy duty truck. It has an Earnings ESP of +10.46% for second-quarter 2020. The Zacks Consensus Estimate for Advance Auto Parts' current-year earnings has improved 1.4% over the last 7 days. The company will report on Aug 18, before the opening bell.

Target Corp. TGT operates as a general merchandise retailer in the United States. It offers beauty and household essentials, food assortments, including perishables, dry grocery, dairy, and frozen items; and apparel, accessories, home décor products, electronics, toys, seasonal offerings, and other merchandise. The company has an Earnings ESP of +13.85% for second-quarter fiscal 2020 (ended July 2020).

The Zacks Consensus Estimate for Target's current-year earnings has improved 2.4% over the last 30 days. It has a trailing four-quarter earnings surprise of 14.4%, on average. The company will release earnings report on Aug 19, before the opening bell.

Lowe's Companies Inc. LOW is one of the world’s leading home improvement retailers, offering services to homeowners, renters and commercial business customers. The company has an Earnings ESP of +4.41% for the second-quarter of fiscal 2020 (ended July 2020).

Lowe's Companies has an expected earnings growth rate of 26.6% for the current year (ending January 2021). The Zacks Consensus Estimate for current-year earnings has improved 5.4% over the last 7 days. It has a trailing four-quarter earnings surprise of 13.1%, on average. The company will release earnings report on Aug 19, before the opening bell.

The TJX Companies Inc. TJX operates as an off-price apparel and home fashions retailer. It operates through four segments: Marmaxx, HomeGoods, TJX Canada, and TJX International. The company has an Earnings ESP of +78.57% for second-quarter fiscal 2021 (July 2020). The TJX Companies will release earnings report on Aug 19, before the opening bell.

Ross Stores Inc. ROST operates off-price retail apparel and home fashion stores under the Ross Dress for Less and dd's DISCOUNTS brands. It primarily offers apparel, accessories, footwear and home fashions. The company has an Earnings ESP of +1.97% for second-quarter fiscal 2020 (July 2020). Ross Stores will release earnings report on Aug 20, after the closing bell.

5 Stocks Set to Double

Each was hand-picked by a Zacks expert as the #1 favorite stock to gain +100% or more in 2020. Each comes from a different sector and has unique qualities and catalysts that could fuel exceptional growth.

Most of the stocks in this report are flying under Wall Street radar, which provides a great opportunity to get in on the ground floor.

Today, See These 5 Potential Home Runs >>

Click to get this free report Target Corporation (TGT) : Free Stock Analysis Report The Home Depot, Inc. (HD) : Free Stock Analysis Report Walmart Inc. (WMT) : Free Stock Analysis Report Ross Stores, Inc. (ROST) : Free Stock Analysis Report Advance Auto Parts, Inc. (AAP) : Free Stock Analysis Report The TJX Companies, Inc. (TJX) : Free Stock Analysis Report Lowes Companies, Inc. (LOW) : Free Stock Analysis Report To read this article on Zacks.com click here. Zacks Investment Research