Walmart, Target and Amazon are part of Zacks Earnings Preview

For Immediate ReleaseChicago, IL – February 18, 2025 – Zacks.com releases the list of companies likely to issue earnings surprises. This week’s list includes Walmart WMT, Target TGT and Amazon AMZN.Retail Earnings Loom: Can Walmart's Momentum Continue?Walmart shares have been standout performers this year, handily outperforming not just the broader market indexes and peers like Target but also the likes of Amazon and most of the Magnificent 7 group members.With the company on deck to report quarterly results on Thursday, February 20th, it will be interesting if the stock can maintain its performance momentum after the results. Walmart shares reacted favorably to each of the last four quarterly results, with the stock up more than +20% since the last release on November 19th.The chart below spotlights Walmart's impressive performance. The chart tracks the one-year performance of Walmart shares (up +84.9%) relative to the S&P 500 index (+22.6%), Amazon (+34.8%) and Target (-12.5%).Walmart will kick off the Q4 reporting cycle for the 'conventional' retailers this week, with the rest of the group coming out from the following week onwards.The Walmart report will set the tone for the rest of the retail space, as it will give us a good sense of the health of household finances and consumer spending trends.For example, one persistent spending trend in the post-Covid period has been consumers prioritizing spending on discretionary services like travel, leisure, dining out, and hospitality and spending far less on discretionary goods categories, including big-ticket items like appliances, furniture, etc.The very notable underperformance of Target shares in the first chart we shared is a direct result of this weak demand for discretionary merchandise, a product category to which Target is heavily exposed to.Unlike Target, Walmart has a much heavier indexing to groceries and other staple and must-have product categories that enjoy a relatively more stable demand backdrop through the economic cycle. Walmart's value orientation and well-executed digital strategy have been key to gaining grocery market share by attracting higher-income households.Walmart's growing share of higher-income grocery spending notwithstanding, the retailer still has substantial exposure to lower-income consumers who have been under a lot of financial stress due to the cumulative effects of inflation. Walmart has thus far been able to offset weakness from lower-income consumers by attracting more higher-income households through its efficient digital offerings.Walmart's growing e-commerce isn't just a means to attract higher-income households, as it also opens up avenues for other higher-margin revenue streams like advertising and third-party fulfillment.Walmart is expected to report $0.64 in EPS on $179.3 billion in revenues, representing year-over-year changes of +6.7% and +3.4%, respectively. Trends in Walmart's non-grocery business have been anemic lately, though management had pointed to some early signs of stabilization in a few discretionary product categories at the last two earnings calls. Any signs of strengthening within discretionary merchandise will also have positive read-throughs for Target.With respect to the Retail sector 2024 Q4 earnings season scorecard, we now have results from 17 of the 33 retailers in the S&P 500 index. Regular readers know that Zacks has a dedicated stand-alone economic sector for the retail space, which is unlike the placement of the space in the Consumer Staples and Consumer Discretionary sectors in the Standard & Poor's standard industry classification.The Zacks Retail sector includes not only Walmart, Target, and other traditional retailers but also online vendors like Amazon and restaurant players. The 17 Zacks Retail companies in the S&P 500 index that have reported Q4 results already belong mainly to the e-commerce and restaurant industries, though we have many restaurant companies on deck to report results this week as well.Total Q4 earnings for these 17 retailers that have reported are up +47.1% from the same period last year on +8.6% higher revenues, with 64.7% beating EPS estimates and only 70.6% beating revenue estimates.The EPS beats percentages for these online players and restaurant operators are tracking above what we had seen in the last two quarters for this same group of companies, but the Q4 EPS beats percentage of 64.7% is tracking below the 20-quarter average of 72.9% for this group of companies. The group's performance on the revenues side is a lot better, with the Q4 revenue beats percentage not only tracking above what we had seen in other recent periods but also above the historical average.With respect to the elevated earnings growth rate at this stage, we like to show the group's performance with and without Amazon, whose results are among the 17 companies that have reported already. As we know, Amazon's Q4 earnings were up +86.9% on +10.5% higher revenues, beating EPS and top-line expectations.As we all know, the digital and brick-and-mortar operators have been converging for some time now, with Amazon now a decent-sized brick-and-mortar operator after Whole Foods and Walmart being a growing online vendor. As we noted in the context of discussing Walmart's coming results, the retailer is steadily becoming a big advertising player thanks to its growing digital business. This long-standing trend got a huge boost from the Covid lockdowns.Earnings for the group outside of Amazon are essentially flat on a +6.3% top-line gain, which points to margin pressures for the group.Q4 Earnings Season ScorecardThrough Friday, February 14th, we have seen Q4 results from 384 S&P 500 members, or 76.8% of the index's total membership. Total earnings for these companies are up +11.8% from the same period last year on +5.6% higher revenues, with 77.3% beating EPS estimates and 65.1% beating revenue estimates.Key Earnings Reports This WeekWe have almost 400 companies on deck to report results this week, including 43 S&P 500 members. In addition to the aforementioned Walmart release, we have a number of the major Chinese Tech players on deck to report results this week, including Alibaba, Baidu, and Sohu.com. We also have many restaurant operators reporting results this week, including Cheesecake Factory, Shake Shack, Texas Roadhouse, and others.The Earnings Big PictureExcluding the contribution from the Mag 7 companies, Q4 earnings for the rest of the S&P 500 index would be up +8.3% on +4.5% higher revenues.For a detailed look at the overall earnings picture, including expectations for the coming periods, please check out our weekly Earnings Trends report >>>> Breaking Down the Current Earnings Outlook Why Haven't You Looked at Zacks' Top Stocks?Since 2000, our top stock-picking strategies have blown away the S&P's +7.7% average gain per year. Amazingly, they soared with average gains of +48.4%, +50.2% and +56.7% per year.Today you can access their live picks without cost or obligation.See Stocks Free >>Media ContactZacks Investment Research800-767-3771 ext. 9339support@zacks.comhttps://www.zacks.comZacks.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/performancefor information about the performance numbers displayed in this press release.Only $1 to See All Zacks' Buys and SellsWe're not kidding.Several years ago, we shocked our members by offering them 30-day access to all our picks for the total sum of only $1. No obligation to spend another cent.Thousands have taken advantage of this opportunity. Thousands did not - they thought there must be a catch. Yes, we do have a reason. We want you to get acquainted with our portfolio services like Surprise Trader, Stocks Under $10, Technology Innovators,and more, that closed 256 positions with double- and triple-digit gains in 2024 alone.See Stocks Now >>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 Amazon.com, Inc. (AMZN): Free Stock Analysis Report Target Corporation (TGT): Free Stock Analysis Report Walmart Inc. (WMT): Free Stock Analysis ReportTo read this article on Zacks.com click here.Zacks Investment ResearchWeiter zum vollständigen Artikel bei Zacks Weiter zum vollständigen Artikel bei Zacks