As the broader equity markets have approached new 52-week highs, the retail sector has participated in this rally as well. Wall Street is still waiting on a host of retail companies to report their third-quarter results in the days ahead. Here are four companies in particular to keep an eye on when they report their earnings November 17.
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Holding Ground
When home improvement retailer Home Depot (NYSE: HD) announces its Q3 results before the market opens November 17, analysts will be looking for it to report a 20% drop in EPS on an 8.4% decline in sales when compared to the company's year-ago quarter. This consensus may prove to be a little too conservative. Home Depot has soundly beaten estimates in each of its past four fiscal quarters.
Home Depot shares have advanced 16.7% so far in 2009, and the stock sports an impressive 3.5% dividend yield. The company has been performing quite well in light of tough housing and job markets. In August, Home Depot revised its full-year forecast upward to indicate expected EPS from continuing operations to finish between flat and up 7% over the retailer's FY 2008 results.
Department store operator Saks (NYSE: SKS) is expected to be in for a more sluggish quarter than Home Depot. The consensus is that Saks will check in with a net loss of 12 cents per share on a 10.6% slide in sales on a year-over-year basis. Saks has seen its stock price surge 43.8% year to date, and its October sales experienced a slight uptick compared to the prior year.
On The Mark
Should Target (NYSE: TGT) match analysts' estimates when it announces its Q3 results before the market opens November 17, the company will post 2% EPS growth accompanied by a 0.8% rise in sales over its year-ago quarter. Target shares are presently trading just below their 52-week high and are up 44.9% in 2009.
In its Q2, Target reported better-than-expected earnings as the retailer benefited from strong operating margins in its retail segment. The company's credit card business performed in line with management's expectations. At the end of Q2, Target had 71 more stores up and running compared to the same time in 2008.
Another retailer that will announce its Q3 results November 17 and also is trading near a 52-week high is The TJX Companies (NYSE: TJX). With consumers altering their spending habits during this economic downturn, Wall Street is looking for TJX to report year-over-year EPS growth of 38.6% on a 9.8% improvement in sales. The off-price retailer has seen its stock price run-up 90% year to date.
The Bottom Line
Compared to Q3 2008, none of these retailers except TJX are really expected to tear the cover off the ball - maybe some modest improvements. That being said, their performances have been impressive given the grim operating environments they have faced. Investors who have remained patient with these names are being rewarded as these stocks continue to inch higher. (Read Analyzing Retail Stocks to learn about the most important metrics to look at when analyzing retail stocks.)
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