The last group of companies to publish third quarter financial results this season are major US retailers.
The industry includes several notable winners during the COVID-19 pandemic as consumers accelerated their shift to online shopping in the wake of social distance restrictions and government-imposed lockdown measures.
Not surprisingly, retail-related ETFs are trading at their best ever levels, with the SPDR S&P Retail ETF (NYSE 🙂 up about 19% so far this year, compared to gains of about 10% over compared to the same level. period.
Ahead of their upcoming quarterly reports, we'll highlight three of the top-performing names in the industry who have proven to compete successfully with Amazon (NASDAQ 🙂 online:
1. Home Depot : Reports November 17 before Markets open
Estimated earnings per share: + 18.2% on an annual basis
Estimated revenue growth: + 15% on an annual basis
Home Depot (NYSE 🙂 has boomed this year, with a share of the Atlanta, Georgia-based retailer up about 26% in 2020 as Americans invested more in their homes and made renovations amid coronavirus-related lockdowns.
Shares, which hit a record high of $ 292.90 in late August, reached $ 275.57 on Tuesday, bringing the largest US home improvement retailer to a market cap of $ 296.6 billion.
Home Depot, which reported second-quarter earnings and sales, is expected to post earnings per share of $ 2.99 on Tuesday, up 18.2% from earnings per share of $ 2 , 53 in the same quarter a year earlier.
Revenues are expected to increase 15% from the same period last year to $ 31.3 billion, driven by strong demand from DIY customers for the building materials and construction products range.
In addition to revenues and earnings, investors will want to keep a close eye on the growth in Home Depot's e-commerce numbers, which grew more than 100% year-on-year in the second quarter. The company noted that 60% of those sales were bought online and picked up from the store.
U.S. comparable sales – revenue generated from a retail location – will be critical, especially given the 25% increase in the second quarter.
Looking ahead, comments from management regarding the ongoing impact of the coronavirus on global supply chains will also be of interest.
2. Target reports on November 18 before markets open
Estimated earnings per share: + 11.8% on an annual basis
Estimated revenue growth: + 10.4% year on year
Target (NYSE 🙂 has been a strong player in retail space this year, with a share of around 23% in 2020, largely due to its rapid growth in e-commerce and online sales amid the ongoing coronavirus pandemic.
The Minneapolis, Minnesota-based retailer's share – which hit a record high of $ 167.41 on October 20 – ended Tuesday at $ 158.07, representing a valuation of $ 79.1 billion.
After reporting second quarter results in August, consensus calls on Target to publish third quarter earnings per share of $ 1.52 next Wednesday, which would indicate year-over-year growth of about 12% over earnings per share of $ 1.36.
Meanwhile, sales are expected to increase by about 10% from the same period a year ago to $ 20.62 billion thanks to the big-box retailer's continued efforts to provide faster shipping options and in-store order pickups. to add.
As such, investors will pay close attention to the growth in Target's e-commerce numbers, which rose by a record 195% in the previous quarter. The company announced in its latest earnings report that sales through its curbside pick-up service were up more than 700% in the second quarter from a year earlier.
Investors will also monitor similar sales – including sales both online and in stores that have been open for at least a year – to see if it can maintain its impressive array of beats. Target said the key metric was up a record high of 24.3% in the three months ended Aug. 1.
General comments about the economy and health of the US consumer from executives at the post-earnings conference call will also be relevant as Target prepares for the holiday season amid the ongoing pandemic.
3. Best Buy: Reports Nov. 24 before markets open
Estimated earnings per share: + 45.1% on an annual basis
Estimated revenue growth Q3: + 10.9% on an annual basis
Best Buy (NYSE 🙂 thrived in 2020, with the consumer technology giant benefiting from strong growth in e-commerce revenues during the COVID-19 outbreak. The Richfield, Minnesota-based retailer has seen its inventory increase by about 29% since the start of the year.
Shares, which hit a record high of $ 124.82 on Nov. 5, yesterday settled at $ 112.63, giving the largest US consumer electronics retailer a market capitalization of $ 29.1 billion.
Best Buy's earnings and revenues can be easily viewed in the last quarter. For the third quarter, consensus estimates call for the tech gadget retailer to record earnings of $ 1.64 per share on Tuesday, Nov. 24, up 45.1% from earnings per share of $ 1.13 in the same period a year ago.
Sales are projected to be $ 10.83 billion, approximately 11% more than sales of $ 9.76 billion in the same period a year earlier, reflecting continued demand for computers, tablets and other home work equipment .
Investors will be keen to see if the retailer's domestic online sales can sustain their searing growth rate after rising more than 240% in the second quarter to $ 4.85 billion. The company is still one of the few electronics retailers still thriving amid increasing competition from Amazon.
Aside from the top-and-bottom-line numbers, market players are hoping that Best Buy will provide guidance for its key fourth quarter, which includes the Christmas shopping season, after it failed to forecast the previous quarter's results because of the uncertainty surrounding the pandemic.
