The following is an excerpt from this week’s Earnings Trends article. To see the full article, please click here.
The Q1 earnings season has effectively come to an end, with even the Retail sector’s results now mostly behind us. The sector had a good run earlier on when most of the results were from restaurants and online operators. But the picture started turning negative as reports from the department stores and bi-box retailers came out. While we did see positive results a few major players like Home Depot (HD – Analyst Report) and Target (TGT – Analyst Report), sector bellwethers like Wal-Mart (WMT – Analyst Report) and Macy’s (M – Analyst Report) came up short of expectations. Overall, the Retail sector’s performance comparison is at best mixed relative to other recent periods, which isn’t bad given the broad-based weakness in most other sectors.
Including today’s Retail sector earnings reports, we now have Q1 results from 32 of the 41 retailers in the S&P 500 index that combined account for 90.8% of the sector’s total market capitalization in the index. Total earnings for these retailers are up +4.6% on +5.7% higher revenues, with 75.0% beating EPS estimates and 46.9% coming ahead of revenue estimates.
The side-by-side comparison charts below compare the sector’s Q1 results with other recent periods. As you can see, the comparison is mixed.
Q1 Scorecard (as of May 20th, 2015)
Total earnings for the 475 S&P 500 members that have reported results already are up +2.4% on -3.4% revenues, with 65.0% beating EPS estimates and only 44.0% coming ahead of top-line expectations.
As we have stated repeatedly in this space since the start of this reporting cycle, this is weak performance compared to what we have seen from the same group of 475 S&P 500 members in other recent periods. (Please note that we provide the scorecard for the Russell 2000 index on page 16 of the detailed report).
The two side-by-side charts below give a historical context to the results thus far – by comparing the Q1 earnings & revenue growth rates (left-hand side chart) and earnings & revenue beat ratios (right-hand side chart) with what these same companies achieved in the preceding quarter as well as the 4-quarter average.
