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Housing Starts, Permits Mixed; Q3 Beats for TGT, LOW, TJX

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Wednesday, November 17, 2021

Pre-market indexes look poised to give back some of the gains made in Tuesday’s regular session, with only the the Nasdaq +5 points at this hour. Hard to see why exactly, though — with the ink on the Infrastructure Package not yet dry, we see mixed numbers for the housing market and earnings beats across the board for Target TGT, Lowe’s LOW and The TJX Companies TJX.

Perhaps the Coupa survey of national retailers is giving some investors pause: with supply chain costs surging this holiday shopping season, no fewer than 91% of retailers expect a negative impact to their Q4 revenues. All supply chain costs are up: 600% in container shipping, 20% in trucking and 29% in rail. This year, 71% of retailers expect to offer fewer Black Friday sales, largely due to higher costs in bringing goods to their stores.

Housing Starts for October missed expectations to 1.52 million, -0.7% month over month. Analysts had been looking for an incremental increase from the previous month’s downwardly revised 1.53 million. This marks the second-straight month housing starts have gone lower. Even as multi-unit starts grew +6.8% for the month, the real money is in single-family homes, which dropped -3.9%. Only the Midwest region gained for the month, +5.6%.

Building Permits, on the other hand, saw 4% month-over-month growth to 1.65 million from an unrevised 1.59 million units for September. Again, the bigger gains were in the multi-family space: buildings with 5+ units grew +6.5% last month, while single-family permits were +2.7%. Building permits are generally seen as a forward indicator of future housing starts, which may point to higher levels in starts in the coming months.

Target shares are sinking nearly -5% in today’s pre-market, following the big-box retailer’s beat on both top and bottom lines: $3.03 per share amounted to a +5.57% surprise over the Zacks consensus $2.87 per share, on $25.65 billion in quarterly sales which presented a +3% positive surprise, and more than +10% year over year. That said, Target shares had been up nearly 51% year-to-date; this looks like a “sell the news” scenario. For more on TGT’s earnings, click here.

Lowe’s Companies, however, are nearly +3% before the opening bell on its 17.17% earnings beat to $2.73 per share in the quarter, on $22.92 billion in sales for a +4.6% positive revenue surprise. Full-year revenue guidance was also raised, which may account for part of the early morning gains; Lowe’s stock was already up +52% year to date. For more on LOW’s earnings, click here.

The TJX Companies beat expectations by 3 cents on its bottom line to 84 cents per share, a +3.7% earnings surprise and nicely ahead of the 71 cents per share posted in the year-ago quarter. Revenues of $12.53 billion for the discount retailer (owner of TJ Maxx and Marshall’s stores), for a +1.78% sales beat and above the $10.12 billion reported in the year-ago quarter. For more on TJX’s earnings, click here.

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