Retail Earnings Expectations: Home Depot And Target

• Reports from two big-box retailers will be among earnings highlights this week.
• Wall Street analysts expect very different results each of them.
• Just one of them exceeded earnings expectations in the previous two periods.

The parade of big retailers sharing their latest quarterly results has begun, and so far those reports have confirmed that the woes in the retail sector have continued. Many more retail earnings reports are expected this week. Among the highlights will be results from big-box store operators Home Depot Inc HD and Target Corporation TGT.

The Wall Street consensus forecast calls for the former to show solid bottom-line growth, as well as a modest gain in revenue, in the period when it shares hit a new all-time high after an earnings beat and dividend hike.

Meanwhile, the latter is expected to post smaller earnings than a year ago, along with a revenue decline. In the period, some progress on the e-commerce front was not enough to offset troubling results that sent shares to a multiyear low.

Home Depot

When this home improvement superstore operator shares its fiscal first-quarter results before the opening bell on Tuesday, the analysts on average predict that it will post $1.61 per share in earnings. That compares to the $1.44 per share in the prior quarter and $1.44 a year ago. And the $23.72 billion in expected revenue would be up more than 4 percent year over year. Note that earnings per share topped consensus estimates by a penny or two in the previous two quarters.

The forecast from 106 Estimize respondents is a bit higher, with EPS expected to come in at $1.64. That would be the highest first-quarter profit in two years. And the consensus revenue estimate for the three months that ended in April is also $23.77 billion, up from $22.20 billion in the prior quarter.

Target

Wall Street's consensus forecast calls for EPS at this Minneapolis-based retailer to have slipped from $1.29 in the same period of last year to $0.91. The 52 Estimize respondents have the same consensus estimate for the three months that ended in April. Note that EPS fell short of both Estimize and Wall Street expectations in the previous period, which included the holiday shopping season.

Estimize overestimated revenue in the previous quarter, and this time the respondents are looking for $15.67 billion. That would be down from the $16.20 billion reported in the year-ago quarter, and it also compares with the Wall Street forecast of $15.65 billion. Look for Target to share its first-quarter results early Wednesday.

And Others

Other retailers predicted to offer up year-over-year earnings growth when they report this week include Alibaba, Citi Trends, Dick's Sporting Goods, Ross Stores and TJX Companies. Per-share earnings at Staples will be the same as a year ago, if the analysts are correct.

But consensus forecasts call for shrinking profits from American Eagle Outfitters, Buckle, Cato, Gap, Hibbett Sports, L Brands, Stein Mart, Urban Outfitters, and the biggest of them all, Wal-Mart. And a net loss is anticipated from Stage Stores.

The following week, keep an eye out for earnings reports from Abercrombie & Fitch, AutoZone, Best Buy, Costco, GameStop, Lowe's, Tiffany and more.

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