The earnings season is rapidly coming to a conclusion, but there are still plenty of big names to monitor, with this week's earnings report heavily weighted in the retail sector.
With the market showing a lot of concern over a possible recession on the horizon, and the impact the trade war is having on consumer spending, retail takes on extra importance this earnings season. Consumer spending accounts for a huge portion of the nation's GDP, and the health of the retail sector is a very good barometer of the overall economy.
This week's retailers will paint a much clearer picture of the overall landscape that retailers will face as quickly approach the all-important holiday shopping season.
Target (TGT)
Mega retailer Target (TGT) will release its Q2 numbers before the market open on Wednesday with analysts expecting earnings of $1.61 per share and revenue of $18.33 billion, up from $1.47 on $17.8 billion during the same period last year. TGT has been a strong performer in 2019 with shares appreciating 31% on the year as Wall Street has rewarded the stock for the company's ability to show improvements both in-store and online. Target was late to find traction in the e-commerce space, but online sales have been rising, which has analysts optimistic. The street expects to see Target post a positive earnings surprise with a whisper number of $1.67 for the quarter, but the real driver of the stock will be the strength of the company's online sales. TGT is trading at $86.61 with an average price target of $91.71.
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Foot Locker (FL)
Athletics apparel and footwear retailer Foot Locker (FL) will report its second-quarter numbers after the market close on Friday. Ahead of the report analysts forecast earnings of $0.66 per share with revenue of $1.82 billion. During the same period last year Foot Locker earned $0.75 on $1.78 billion. When the company last reported in May, earnings fell well short of the consensus and revenues also missed, which led to a sharp selloff in the stock. FL has yet to recover, and shares are currently trading just above their 52-week low. The good news for investors is that so much negativity has been priced into the stock that shares are trading at just 7.4 times future earnings which should limit the downside risk barring another wide miss. The street expects a small earnings miss with a whisper number of $0.65. Since the $0.01 miss has already been priced into the stock it should not lead to a drop, and any number at or above $0.66 would drive shares sharply higher. FL trades at $40.01 with an average price target of $60.33.
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BJ's Wholesale Club (BJ)
Membership club BJ's Wholesale Club (BJ) reports second-quarter earnings before the market open on Thursday with the consensus calling for earnings of $0.37 per share with revenues of $3.44 billion. During the same period last year the company earned $0.31 on sales of $3.2 billion. The stock has trended lower since mid-April and is currently down 1.8% on the year. The drop comes despite two straight quarterly reports that topped estimates on both the top and bottom line. The stock's valuation looks good with shares trading at 13 times future earnings which are expected to rise at an annual rate of 12.2% over the next five years. The street is expecting to see another positive earnings surprise with a whisper number of $0.40 per share, but it remains to be seen if that number would be enough to bring optimism back into the stock. BJ is trending in the lower end of its 52-week range at $21.78 with an average price target of $30.91.
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Dick's Sporting Goods (DKS)
Athletic goods and apparel retailer Dick's Sporting Goods (DKS) is scheduled to release its second-quarter results this week. The company reports before the market open on Thursday. Analysts forecast quarterly earnings of $1.21 per share and revenue for the three months of $2.20 billion. The company earned $1.20 and reported revenue of $2.18 billion during the same period last year. DKS has been volatile in recent months, and the stock is currently trading up 6.3% on the year but in a downward trend. The company needs to report a strong set of quarterly numbers to boost investor sentiment. At the end of May the company posted better than expected numbers on both the top and bottom line which drove shares higher before selling off in the volatile market over the last month. Earnings growth has been modest, and analysts forecast profits to rise just 2.2% during the current year and 3.9% per annum over the next five years. Given the anemic estimates, the company can not afford a negative surprise, but with a forward P/E of just 9.6 the downside is likely limited barring a huge earnings miss for the quarter. DKS trades at $33.22 with an average price target of $37.50.
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