Published on 23 Nov 2021 on Zacks via Yahoo Finance
Retail ETFs to Gain on Q3 Earnings Wave
The overall earnings picture for the retail sector this earnings season has been robust. Total earnings from 94.7% of the sector’s total market capitalization reported so far are up 8.4% on 11% higher revenues, with 85.2% beating EPS and revenue estimates.While the proportion of these companies beating third-quarter EPS and revenue estimates is below the preceding quarter, the beat percentages are nevertheless tracking historical averages. Third-quarter earnings reflect a modest contraction in margins as a result of supply chain issues and inflationary pressures (see: all the Consumer Discretionary ETFs here). SPDR S&P Retail ETF XRT, VanEck Vectors Retail ETF RTH, First Trust Nasdaq Retail ETF FTXD, Amplify Online Retail ETF (IBUY) and ProShares Online Retail ETF ONLN are poised to gain from the upbeat earnings. Let’s dig into the details of some of the earnings releases.
Earnings in Focus
The second-largest department store retailer, Macy’s M emerged as one of the biggest winners, skyrocketing about 21.2% — its largest one-day percentage gain in decades — following its earnings release. It beat earnings estimates by 88 cents. Revenues outpaced the consensus estimate by $113 million. Macy’s raised its outlook for fiscal 2021. The company expects sales to be in the range of $24.12-$24.28 billion, up from the previous guidance of $23.55-$23.95 billion and adjusted earnings in the range of $4.57-$4.76 compared with the prior projection of $3.41-$3.75 per share.Leading departmental store Kohl’s KSS soared 10.6% following the blowout results and stronger-than-expected guidance. Kohl’s posted adjusted earnings of $1.65 per share, beating the Zacks Consensus Estimate by 96 cents. Revenues of $4.6 billion topped the consensus mark of $4.57 billion. The retailer raised its guidance for fiscal 2021. Management now expects net sales to grow in the mid-twenties percentage range, up from the previous projection of low-twenties percentage rate growth.Home Depot HD, the world's largest home improvement retailer, gained 5.7% in response to its earnings. Earnings per share of $3.92 surpassed the Zacks Consensus Estimate by 51 cents and revenues outpaced the same by $1.8 billion. Meanwhile, the second-largest home improvement retailer, Lowe’s LOW beat estimates for earnings by 40 cents and revenues by $1 billion. Notably, the company delivered the 10th straight earnings beat and the seventh consecutive sales surprise. Lowe’s raised its revenue guidance to nearly $95 billion from the prior prediction of $92 billion (read: Home Depot Rises Post Q3 Earnings: ETFs to Buy).Big-box retailer, Target TGT, topped the Zacks Consensus Estimate for earnings and revenues by 16 cents and $746 million, respectively. The company has surpassed the earnings estimates every time since the October quarter of 2018.The world's largest retailer, Walmart WMT, topped earnings estimates by 6 cents and revenue estimates by $4.8 billion. Walmart raised its annual earnings per share view to $6.40 from the previous expectation of $6.20-$6.35 for fiscal 2022 (read: ETFs to Gain on Strong Q3 Walmart Earnings).