- Earnings reports from retailers this week should provide an update on consumer-spending trends.
- Walmart told investors last month that its adjusted earnings per share could fall as much as 13% in the current fiscal year.
- Cisco warned investors in May that it could report zero sales growth for its fiscal fourth quarter.
With the majority of mega-cap earnings results already released, this upcoming week's reports are set to focus mostly on retailers and their forecasts for the second half of this year amid inflationary pressures and lingering supply-chain disruptions.
Investors will also be watching for updates on the ongoing worker shortage and the impact of all of this on retail sales and prices. U.S. inflation decelerated in July by a greater rate than anticipated, reflecting lower energy prices, and that may take some pressure off the Federal Reserve to continue aggressively hiking interest rates.
Earnings reports from some of the largest U.S. retailers this week should provide an update on consumer spending trends and on how retailers are coping with rising costs and inventory and supply-chain issues.
Below, we've short-listed three stocks that could see some accelerated trading action after they report quarterly numbers during the week:
1. Walmart
America’s biggest retailer, Walmart (NYSE:WMT), is scheduled to report its fiscal 2023 second-quarter earnings on Tuesday, Aug. 16, before the market opens. Consensus anticipates earnings per share of $1.63 on revenue of $150.93 billion.
Walmart told investors last month that its adjusted EPS could fall as much as 13% in the current fiscal year as U.S. shoppers, hurt by soaring prices, cut spending on big-ticket items and focus on buying less profitable groceries.
Source: Investing.com
Two months ago, the company had said earnings per share would only dip about 1%. Prior to that, in February, it had predicted a modest increase.
The latest earnings report from the world’s largest retailer could also provide more clues on consumer spending trends and some insight into the company’s efforts to get rid of its high inventory levels, which have been pressuring earnings.
Walmart stock closed on Friday at $132.22, down about 9% for the year.
2. Home Depot
Home-improvement giant Home Depot (NYSE:HD) is also set to report its first-quarter earnings on Tuesday before the market opens. Analysts expect $4.94 a share in profit on sales of $43.36 billion.
The retailer boosted its annual outlook in May after an unexpected jump in first-quarter same-store sales showed that demand for its products continues to remain strong, even as mortgage rates rise. Some of the higher sales, however, were due to higher inflation, which is at a four-decade high.
Source: Investing.com
After an encouraging Q1 sales report, Home Depot now predicts comparable-sales growth of 3% this year, compared with a prior expectation of “slightly positive” sales growth. It also projects that earnings per share, excluding some items, will rise by mid-single digits after last quarter's forecast for a low-single-digit increase.
HD stock, which closed on Friday at $314.89, has weakened 24% this year.
3. Cisco Systems
Cisco Systems (NASDAQ:CSCO) is set to report its fiscal 2022 fourth-quarter earnings on Wednesday, Aug. 17 after the market close. The San Jose, Calif.-based networking giant will likely report an $0.82-per-share profit on sales of $12.73 billion, according to analysts’ consensus forecast.
Cisco warned investors in May that it could report zero sales growth for the quarter mainly due to Chinese lockdowns and other supply disruptions.
Source: InvestingPro+
Cisco’s weak forecast has also raised fears that customers could be cutting spending amid fears of a recession. Chief Executive Officer Chuck Robbins told investors in February that Cisco is seeing strong demand for equipment across its businesses, driven by companies looking to upgrade their infrastructure. The current slowdown is mainly due to supply disruptions, according to Cisco's update.
Cisco stock, which closed on Friday at $46.61, has lost a quarter of its value this year.
Disclosure: The writer owns shares of HD.
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