Zacks Earnings Trends Highlights: Target and Walmart

For Immediate ReleaseChicago, IL – November 21, 2024 – Zacks Director of Research Sheraz Mian says, "Total Q3 earnings for the 469 S&P 500 members that have reported results are up +6.5% on +5.2% higher revenues, with 73.8% beating EPS estimates."Walmart & Target: A Closer Look at Retail EarningsNote: The following is an excerpt from this week’s Earnings Trends report. You can access the full report that contains detailed historical actual and estimates for the current and following periods, please click here>>>Here are the key points:Total Q3 earnings for the 469 S&P 500 members that have reported results through Wednesday, November 20th, are up +6.5% on +5.2% higher revenues, with 73.8% beating EPS estimates and 61.4% beating revenue estimates. The reporting cycle has ended for half of the 16 Zacks sectors.Looking at Q3 as a whole, combining the actual results from the 469 index members that have reported with estimates for the still-to-come companies, total S&P 500 earnings are currently expected to be up +7.7% from the same period last year on +5.6% higher revenues.Earnings growth is expected to accelerate after the modest growth pace in Q3, with double-digit earnings growth projected in three of the next four quarters.For 2024 Q4, total S&P 500 earnings are currently expected to be up +7.7% from the same period last year on +4.9% higher revenues. Had it not been for the Energy sector drag, Q4 earnings for the rest of the index would be up +9.8%. Are Target’s Woes Company Specific?Target TGT disappointed once again, with the company not only missing estimates but also guiding lower. This is in sharp contrast to what we saw in Walmart’s WMT beat-and-raise quarterly report, where the company’s positive commentary about trends in its general merchandise category had raised hopes of strong results from Target.Target is more exposed to discretionary product categories, while Walmart is more into must-have groceries. Discretionary product categories have struggled over the last two years as consumers favored travel, leisure, dining, and other ‘experiential’ services in the post-Covid period. This is the primary reason why Target shares have lagged Walmart and the broader market by so much.Target’s persistent earnings underperformance (this is the second of this year’s three quarterly releases that the company has disappointed in its results) is likely reflective of company-specific challenges and not simply a reflection of anemic demand for its merchandise.Target’s same-store sales increased +0.3% while the same at Walmart increased +5.3%. Target’s digital sales increased +10.8% while Walmart’s increased +22% in the U.S. Target’s margins were down from the year-earlier period while Walmart's margins were up year over year.Walmart’s market share gains among higher-income households has been a persistent theme in recent quarters, and that trend was very much in place in the Q3 results. Target’s challenges suggest that part of Walmart’s incremental higher-income gains may have come at Target's expense.We have discussed the Retail sector’s earnings scorecard and how the sector’s Q3 results stack up relative to the other recent periods in section 1 of this report.The Earnings Big PictureLooking at Q3 as a whole, combining the actual results that have come out with estimates for the still-to-come companies, total earnings for the S&P 500 index are now expected to be up +7.7% from the same period last year on +5.6% higher revenues.The Q3 earnings growth pace would improve to +10.1% had it not been for the Energy sector drag (decline of -22.9% for Energy). On the other hand, quarterly earnings for the index would be up +2.8% once the Tech sector’s hefty contribution is excluded (earnings growth of +20.3% for the Tech sector).The quarterly earnings growth pace is expected to improve from next quarter onwards.For the current period (2024 Q4), total S&P 500 earnings are expected to be up +7.7% on +4.9% higher revenues. Q4 earnings would be up +9.8% had it not been for the Energy sector drag.Estimates for the period have started coming down since the quarter got underway. Still, the pace and magnitude of negative revisions are less than we had seen in the comparable period of Q3.The expectation is for double-digit earnings growth in each of the next two years, with the number of sectors enjoying strong growth notably expanding from the narrow base we have been seeing lately.Tech sector earnings are expected to be up +17.1% in 2025, which would follow the sector’s +19.4% earnings growth in 2024. But even excluding the Tech earnings, S&P 500 earnings would be up +11.0% in 2025, with eight of the 16 Zacks sectors expected to enjoy double-digit earnings growth.Why Haven't You Looked at Zacks' Top Stocks?Since 2000, our top stock-picking strategies have blown away the S&P's +7.0 average gain per year. Amazingly, they soared with average gains of +44.9%, +48.4% and +55.2% 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/performance for information about the performance numbers displayed in this press release.Research Chief Names "Single Best Pick to Double"From thousands of stocks, 5 Zacks experts each have chosen their favorite to skyrocket +100% or more in months to come. From those 5, Director of Research Sheraz Mian hand-picks one to have the most explosive upside of all.This company targets millennial and Gen Z audiences, generating nearly $1 billion in revenue last quarter alone. A recent pullback makes now an ideal time to jump aboard. Of course, all our elite picks aren’t winners but this one could far surpass earlier Zacks’ Stocks Set to Double like Nano-X Imaging which shot up +129.6% in little more than 9 months.Free: See Our Top Stock And 4 Runners UpWant 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 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