For Immediate Release
Chicago, IL – August 18, 2014 – Zacks.com releases the list of companies likely to issue earnings surprises. This week’s list includes Home Depot (HD-Free Report), Target (TGT-Free Report), Gap (GPS-Free Report), Hewlett-Packard (HPQ-Free Report) and Salesforce.com (CRM-Free Report).
To see more earnings analysis, visit http://at.zacks.com/?id=3207.
Every day, Zacks.com makes their Bull Stock of the Day available, free of charge. To see it, click here.
Retail Sector Earnings in Focus
The Q2 earnings season has come to an end for 9 of the 16 Zacks sectors in the S&P 500. Except for the Retail sector, most of the other sectors are close to the finish line as well. We will get results from 95 companies this week, including 19 S&P 500 members.
The Retail sector is heavily represented in this week’s reports, with industry leaders like Home Depot (HD-Free Report), Target (TGT-Free Report) and Gap (GPS-Free Report) reporting Q2 results. Notable reports from other sectors include Hewlett-Packard (HPQ-Free Report) and Salesforce.com (CRM-Free Report).
The Retail sector has been struggling on the earnings front in recent quarters and this reporting cycle has been no different. The heavily promotional environment has been forcing retailers to offer discounts to stay relevant even as they deal with the growing shift to online sales. The big brick-and-mortar retailers have been trying to adjust to this shifting landscape. But as many big-box retailer struggles show, it isn’t clear at this stage how the big-box business model will evolve as a result of these industry challenges.
On top of these industry-specific challenges are the issues facing consumers, who have yet to fully recover from the financial crisis. The labor market is no doubt improving, but wage growth has been essentially stagnant, restricting households’ buying power. In a nutshell, it has been a tough backdrop for retailers. No doubt the stock-price performance of the retail sector in the S&P 500 has been one of the weakest in the index – down -1.1% vs. a gain of +6.5% for the index as a whole.
With respect to the sector’s performance thus far, total earnings for 27 Retail sector companies in the S&P 500 that have already reported Q2 results are up +2.0% on +5.9% higher revenues, with only 40.7% beating earnings estimates and a respectable 55.6% coming ahead of top-line expectations.
The 40.7% earnings beat ratio for the sector is the weakest in the S&P 500 index, matching the sector’s under-performance in the preceding quarter. But while Q1 was written off due to weather related issues, there is no handy excuse to fall back upon this time around. Retailers don’t have so much of a revenue problem – revenues are good enough. They have a margin problem, with the super competitive retail environment eating into their margins.
The Q2 Scorecard (as of Friday morning, August 15th)
Total earnings for the 470 S&P 500 members that have reported already are up +8.2% from the same period last year, with a ‘beat ratio’ of 66.0% and a median surprise of +2.7%. Total revenues are up +4.4%, with a revenue ‘beat ratio’ of 61.3% and a median surprise of 0.8%.
Zacks "Profit from the Pros" e-mail newsletter offers continuous coverage of the industries and the stocks poised to outperform the market. Click to subscribe to this free newsletter today.
Zacks.com is a property of Zacks Investment Research, Inc., which was formed in 1978. The later formation of the Zacks Rank, a proprietary stock picking system; continues to outperform the market by nearly a 3 to 1 margin. The best way to unlock the profitable stock recommendations and market insights of Zacks Investment Research is through our free daily email newsletter; Profit from the Pros. In short, it's your steady flow of Profitable ideas GUARANTEED to be worth your time! Register for your free subscription to Profit from the Pros.
Get the full Report on HD - FREE
Get the full Report on TGT - FREE
Get the full Report on GPS - FREE
Get the full Report on HPQ - FREE
Get the full Report on CRM - FREE
Follow us on Twitter: https://twitter.com/zacksresearch
Join us on Facebook: https://www.facebook.com/home.php#/pages/Zacks-Investment-Research/57553657748?ref=ts
Zacks Investment Research is under common control with affiliated entities (including a broker-dealer and an investment adviser), which may engage in transactions involving the foregoing securities for the clients of such affiliates.
Zacks Investment Research
800-767-3771 ext. 9339
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 http://www.zacks.com/performance for information about the performance numbers displayed in this press release.
For Immediate Release