As earnings season begins to slowly fade, a key takeaway has been that quarterly results have primarily turned out to be better than feared, the opposite of what many had been screaming from the rooftops warning us of.
And this week, we have many notable companies slated to report, including Walmart WMT, Cisco Systems CSCO, Home Depot HD, and Deere & Company DE.
Overall, it’s a big week for retail stocks, but there’s still representation from many sectors. How do the four above shape up heading into their respective quarterly prints? Let’s take a closer look at estimates.
Home Depot
Home Depot’s quarterly expectations have been lowered since February, with the $3.81 per share estimate being revised downward by 7.5% from $4.12 per share. The quarterly estimate reflects a modest pullback in earnings from the year-ago quarter, with rising costs likely negatively impacting the quarter’s results.
Image Source: Zacks Investment Research
In addition, the Zacks Consensus Sales Estimate presently sits at $38.5 billion, with the estimate down 2% since February and reflecting a decline of 1% compared to the year-ago period.
The market has primarily had mixed reactions to HD’s quarterly results over the recent term, as illustrated by the arrows circled in the chart below.
Image Source: Zacks Investment Research
Cisco Systems
Cisco’s earnings outlook has improved nicely since February, with the $0.97 per share estimate up nearly 8% and reflecting year-over-year growth of 11.5%. Top line growth is also there, with our consensus estimate of $14.4 billion indicating a 12% climb year-over-year.
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It’s worth noting that CSCO shares have recently broken through the 50-day moving average, indicating a short-term bearish trend with upward momentum fading. A solid quarterly print can push life into the stock; CSCO shares have seen buyers step up following both of its recent earnings releases.
Image Source: Zacks Investment Research
Walmart
Walmart’s quarterly print will undoubtedly be watched like a hawk, as the results will provide a solid gauge of consumer sentiment. The company’s business offers a solid blend of products at reasonable prices, which allows it to capture revenue from lower and higher-end consumers who decide to ‘trade down’ and save their cash.
Walmart has consistently delivered better-than-expected results in a challenging operating environment, exceeding earnings and revenue expectations in each of its last three prints. For the quarter to be reported, we expect the company to post EPS of $1.31 and $148 billion in quarterly revenue.
Below is a chart illustrating the company’s revenue on a quarterly basis.
Image Source: Zacks Investment Research
Walmart shares are a bit expensive on a relative basis, with the current 25.1X forward earnings multiple sitting above the 23.2X five-year median and the Zacks Retail and Wholesale sector average.
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Deere & Company
Similar to CSCO, Deere’s earnings outlook for the quarter to be reported has ticked 5% higher to $8.51 per share, implying an improvement of 25% year-over-year. The company has posted back-to-back quarters of exceeding both earnings and revenue expectations.
Image Source: Zacks Investment Research
DE shares have recently witnessed the ‘death cross,’ which occurs when the 50-day moving average heads below the 200-day moving average. It could potentially reflect a bearish shift for shares, something investors should be aware of.
This ‘death cross’ is illustrated below, with another recent example also blended in.
Image Source: Zacks Investment Research
Bottom Line
While earnings season is winding down, we still have many quarterly prints to sort through, including those from Cisco Systems CSCO, Deere & Company DE, Walmart WMT, and Home Depot HD.
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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
