The retail week is coming, the last part of the income season that traditionally closes this reporting period. Several major retailers will be in the spotlight in the coming week, and most have done surprisingly well this year. The main pick-up option is likely to be whether these brick-loyal people can continue to prove that the story & # 39; retail is dead & # 39; is wrong.
An extra bonus for people who pay attention: there may be interesting opportunities for value investors.
Tuesday, November 19
1. Home Depot: Reports Before Markets Open
Home Depot (NYSE 🙂 is on roll last year. In the past twelve months, the mega store for home improvement has surpassed it by 20%. Shares are currently traded at a record high of $ 237.
Turnover in comparable stores was almost 5% in the last two years. This measurement fell to just 3%, somewhat troubling investors, especially in view of the reduced year-round outlook for management. Turnover is expected to grow by 2.3% this year, considerably lower than the 5-7% we have seen in previous years.
Nevertheless, macro conditions look good for Home Depot. House prices are rising and are strong. These are two critical, positive indicators for Home Depot.
Bullish dissertation for the shares: In general, comparable sales reached closer to 5% than to 3%, eliminating some of the concerns of investors and proof that the slow growth of the latter quarter was only temporary. Home Depot is also very susceptible to trade war rates, so any positive price update from management will send shares higher.
2. TJX companies: markets open
Discount retailer TJX Companies (NYSE 🙂 has increased 43% this year. It surpasses the 12% mark. A conventional retailer that outperforms tech stocks is always remarkable.
The current performance of the stock is mainly due to the fact that the dive of TJX last year – along with the rest of the market – was unjustified. The company based in Framingham, MA has recorded increasing TTM revenues for more than 60 consecutive quarters. Can you argue with fifteen consecutive years of growth?
Comparable sales are a point of attention. Last quarter the number fell to 2%, compared to 5% in the first quarter. Management expects another, with compositions between 1 and 2%. The gross profit remained stable at 28%, even with a lower turnover of the composites. Even if this quarter is weaker than expected, there is no reason to panic. Management is capable and TJX still has expansion options in the US and abroad.
Bullish thesis for the stock: comparable revenue ends at 2% or more and management issues improved guidance for the holidays. The fourth quarter is crucial for TJX. Anything less than record sales will be a disappointment. Guidelines for the next quarter are likely to overshadow this quarter's results, whether they are good or bad.
Wednesday, November 20
3. Purpose: open reports to markets
Target (NYSE 🙂 has implemented two successful growth strategies in last year: redesigning stores to make the shopping experience more enjoyable and at the same time emphasize its online presence. By doing this, the retailer has succeeded in continuing to grow even while the competition is getting stiffer.
The most important number to look at here is what Target calls "Digital Channel Sales" – that's a great way to say e-commerce. , digital channel sales increased 34% and contributed 1.8% to the total reported comparable sales number of 3.4%. This is impressive, not least because online sales represent only 7.3% of Target's current business, which means it has room to grow.
It probably looks complete. Target's operating margin is another critical business measure that is moving in the right direction. In the last quarter, Target increased the operating margin from 6.4% to 7.2%, mainly due to lower sales and administration costs.
Bullish thesis for the share: more of the same. As strange as it may sound, e-commerce is becoming an important part of Target's growth. Target must continue to implement its online strategy, even as the company grows on multiple, additional fronts. Improving margins is also a surefire way for stocks to continue trading at a record high
Thursday, November 21
4. Macy & # 39; s: Reports Before Markets Open
While other retailers were adapting to the new world order, Macy & # 39; s (NYSE :), both the store and the stock, seem to be stuck in the early 1990s.
For $ 16 per share, the department store giant trades at a price first seen in 1996. The company has experienced many ups and downs over the years, but the new decade low price point of $ 14, just below the current and slippery course position, gives some major concerns.
In the third quarter, Macy & # 39; s – they say – sees the most difficult comparable sales number of the year. The cool temperatures last October for Cincinnati, OH, but the weather won't save Macy this year. In his last conference call with analysts in August, Macy almost begged investors to forgive it in advance for a weak Q3, and promised to make up for it by following the anemic quarter with a stronger holiday quarter.
Bullish Thesis on Stocks: Macy’s is already trading at the lowest point in a decade. As a result, the dividend yield is a whopping 9.3%. It also seems to have given up this quarter; maybe it's just lowballing Wall Street to surprise at the top. Nevertheless, management expects a strong Q4, so we may see a relief rally in early 2020.
Friday, November 22
5. Foot Locker: Reports Before Markets Open
Foot Locker (NYSE 🙂 is one of our favorite value shares from the past three years. This is because Wall Street consistently underestimates the retailing of sportswear and sports shoes.
Admittedly, Foot Locker is not in top form. During the, sales grew twice, but it also shrank twice. Yet the company is not nearly dead yet. Nike (NYSE 🙂 no longer sells his shoes on Amazon (NASDAQ) ) 🙂 is a positive development for Foot Locker. Consumers who are not afraid that a recession is on the horizon is another plus for Foot Locker.
Comparable sales last quarter were -0.1%, but that is better than the -0.8% recorded last year for the same quarter. And compositions are even 1.5% higher than the year so far, against a disastrous -2% in the first half of 2018.
Every time something goes wrong with Foot Locker, Wall Street tends to hammer its shares. Foot Locker's drawdowns are a risk that is worth considering, but when the stock price is low enough, the value is there.
Bullish dissertation for the shares: It is not so much that Foot Locker will resume strong growth, but rather that Wall Street will again predict doom for a popular retailer who has repeatedly proven his ability to return to bounce. Stagnant companies that are priced as if they are simply failing are legitimate – and potentially profitable – targets for value investors.
