The last group of companies scheduled to report fourth-quarter earnings this season are major U.S. retailers. Their respective Q4 results include the all-important holiday shopping season, which kicks off on Black Friday, right after Thanksgiving and runs through Christmas. Retailers earn a sizeable chunk of their annual revenue during November and December.
The National Retail Federation said 2019 holiday sales rose 4.1% from the same period a year earlier, to $730.2 billion. Online and other non-store sales increased 14.6% to $167.8 billion. Amazon (NASDAQ:AMZN), which already reported earnings at the end o f last month, said it enjoyed “record-breaking” holiday sales. Indeed, the company's Q4 results were a huge beat, and shares have been on a tear ever since.
The three retailers below are also expected to deliver positive earning reports in the days and weeks ahead.
1. Walmart: Reports Tuesday, Feb. 18, Before Market Open
Shares of Walmart (NYSE:WMT) have underwhelmed so far in 2020, down almost 3% this year, pressured by worries over the impact of the coronavirus and its affect on the global economic outlook. Over the past 12 months, however, the world’s largest retailer's stock is up around 21%, thanks in large part to robust growth in its e-commerce sales. Walmart’s online sales have been rising at a rapid pace compared with the rest of the industry.
The Arkansas-based company’s stock closed at $115.40 on Tuesday, giving it a valuation of about $327.4 billion.
Consensus calls for Walmart's earnings per share (EPS) are $1.45 for the fourth quarter, compared to EPS of $1.41 in the same period a year earlier. Revenue is forecast to increase roughly 3% year-over-year to $142.71 billion, as the retailer enjoyed a strong holiday shopping season.
Beyond the top-and bottom-line figures, investors will be paying close attention to growth in Walmart’s e-commerce figures, which jumped 41% year-over-year in Q3. That was even better than online sales growth of 37% in the preceding quarter. Comparable sales, which rose 3.2% year over year in Q3, will also be of importance. Walmart has posted a more than five-year streak of U.S. growth, unmatched by any other retail chain.
Other developments in focus include whether Walmart continues to gain market share in its food and groceries business. The retailer currently gets 56% of its revenue from food and grocery sales.
Looking ahead, comments from management regarding the impact of the coronavirus on global supply chains and will also be of interest.
2. Best Buy: Reports Thursday, Feb. 27, Before Market Open
Best Buy (NYSE:BBY) continues to be one of only a handful of electronics retailers still thriving, despite the shadow cast by Walmart over the sector. BBY shares are up around 3% so far in 2020.
Year-over-year, the biggest U.S. consumer electronics retailer has seen its stock jump 52% as it successfully shifted focus to customer services, which have helped drive traffic and sales both online and at its brick-and-mortar locations.
The tech gadget retailer’s stock settled at $89.89 last night, within sight of a 52-week high of $91.83 touched on Jan. 14. At current levels, Best Buy’s market cap stands at $23.2 billion.
Consensus calls for Best Buy’s fourth-quarter earnings per share are $2.75, compared to EPS of $2.72 in the year-ago period. Q4 revenue is expected to reach $15.05 billion, up from $14.8 billion in the same period a year earlier.
High demand for gaming merchandise, headphones, tablets and televisions are all expected to have provided a boost to sales. We previously highlighted the name as one of the big winners of the crucial end-of-year holiday shopping season.
In addition, investors will be keen to see if ongoing investments in Best Buy’s online business are continuing to pay off. The retailer’s domestic online revenue surged 15% in Q3 to $1.4 billion.
Overall comments on the economy and the health of the U.S. consumer from executives on the company’s post-earnings conference call will also be of note.
3. Target: Reports Tuesday, March 3, Before Market Open
Similar to Walmart, shares of Target (NYSE:TGT) have had a rocky start in 2020, falling 9% year-to-date due to fears surrounding the coronavirus outbreak. However, Target’s stock is still up almost 65% year-over-year as investors rewarded ongoing efforts made by the discount retailer to revamp its business, including remodeling its website and brick-and-mortar stores, as well as adding faster shipping options and in-store order pickups.
The Minneapolis-based retailer’s stock closed at $116.69 yesterday, giving it a market cap of $59.1 billion.
Target’s all-important Q4 results are expected to have benefited from its aggressive push into faster delivery and ongoing investments in store fix ups. Like Best Buy, we also highlighted Target as one of the big winners of the 2019 holiday shopping season (link above).
Consensus calls for earnings per share of $1.65 for the fourth quarter, up from EPS of $1.53 in the year-ago period. Revenue is forecast to increase 2% from the same period a year earlier to $23.48 billion.
Investors will keep an eye on Target’s update regarding quarterly same-store sales growth to see whether it can maintain its impressive streak of beats. Overall, same-store sales rose by a better-than-expected 4.5% in the third quarter. Digital comparable sales growth, which surged 31% in Q3, will also be in the spotlight.