U.S. Markets closed

Macy's, Nordstrom and Wal-Mart are part of Zacks Earnings Preview

Zacks Equity Research
Shares of Walmart (WMT) have surged over 8% in the last month to help extend its solid 2019 gains, which have helped it easily outpace its industry's 8.9% average. Time to by Walmart stock?

For Immediate Release

Chicago, IL –May 13, 2019 – Zacks.com releases the list of companies likely to issue earnings surprises. This week’s list includes Macy’s M, Nordstrom JWN and Wal-Mart WMT.

What’s Weighing on Department Store Stocks?

The earnings focus shifts to the Retail sector this week as traditional brick-and-mortar retailers come out with their quarterly results. Most of these stocks have struggled this year, with Macy’s underperformance particularly notable.

Macy’s shares are down -25.2% this year, lagging the S&P 500 index’s +14% gain. The stock has underperformed the Zacks Department Store industry as well as peers such as Nordstrom.

The issues plaguing Macy’s outlook are longstanding and not new. These include the company’s struggles with adjusting to the changed retail landscape characterized by consumer dollars steadily shifting to the online medium. Macy’s and other department stores have made good progress in recent years through their so-called omni-channel offerings that integrates the brick-and-mortar infrastructure with the digital offering. For Macy’s, store pickups accounted for 7% of total online sales in Q4, reflecting consumers’ growing embrace of the company’s omni-channel capabilities.

The challenge for Macy’s and other department stores is to hold onto their revenues and margins as they bring their operations in-line with the changed ground realities. But transitions are never smooth, easy or cheap. It is the inherent difficulties of this transition that explains the performance challenge facing Macy’s and other department store companies.

Q1 estimates for Macy’s, which reports quarterly results before the market’s open on Wednesday May 15th, have steadily come down. The company is expected to earn 36 cents on $5.5 billion in revenues, down -25% and -0.21% from the year-earlier period, respectively. The current 36 cents estimate is down from 37 cents a month back and 49 cents three months back.

Given Macy’s recent underperformance and these lowered estimates, the bar is likely fairly low for the company to surprise to the upside. The stock was up in response to the last quarterly release on February 26th, which followed two back-to-back releases that pushed the stock lower.

The other major retailer releasing results this week is Wal-Mart, which reports Thursday May 16th before the market’s open. Wal-Mart’s travails are not as severe as Macy’s, but it is going through its own transition that requires active investments and that is weighing on its margins. The stock has lagged the market this year, up +9% vs. +14% for the S&P 500 index.

In total, we have almost 250 companies releasing results this week, including 9 S&P 500 members.

Q1 Earnings Season Scorecard (as of Friday, May 10th)

We now have Q1 results from 450 S&P 500 members or 90% of the index’s total membership. Total earnings for these 450 companies are up +0.6% from the same period last year on +5% higher revenues, with 77.1% beating EPS estimates and 59.3% beating revenue estimates.

The proportion of these companies beating both EPS and revenue estimates is 51.3%.

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.

Media Contact

Zacks Investment Research

800-767-3771 ext. 9339

support@zacks.com

https://www.zacks.com

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 https://www.zacks.com/performance for information about the performance numbers displayed in this press release.


Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
 
Nordstrom, Inc. (JWN) : Free Stock Analysis Report
 
Walmart Inc. (WMT) : Free Stock Analysis Report
 
Macy's, Inc. (M) : Free Stock Analysis Report
 
To read this article on Zacks.com click here.
 
Zacks Investment Research