The first-quarter 2022 earnings season will almost come to an end this week. Earnings results are better-than-expected so far. Companies of almost all major sectors have already reported their financial numbers. However, the retail sector is an exception as a slew of retailers will report this week.
In the last couple of weeks, several big U.S. retailers missed earnings estimates and issued disappointing guidance. Mounting inflation has resulted in an unexpected rise in logistics and labor costs. Moreover, a section of Americans is shifting expenditure from discretionary items to necessary goods, especially groceries.
Nevertheless, five big retailers are set to beat on earnings this week, which should drive their stock prices in the near future. These are – Advance Auto Parts Inc. AAP, Best Buy Co. Inc. BBY, AutoZone Inc. AZO, DICK’S Sporting Goods Inc. DKS and Ulta Beauty Inc. ULTA.
Strong First-Quarter Earnings Results So Far
As of May 18, 467 S&P 500 companies reported earnings results. Year over year, the total earnings of these companies are up 9.6% on 13.9% higher revenues. Moreover, 78.4% of these companies beat earnings estimates and 74.7% beat revenue estimates.
For the first quarter, total earnings of the S&P 500 Index are currently expected to be up 9.6% year over year on 13.5% higher revenues. The current estimate witnessed a significant improvement from 4.3% year-over-year earnings on 10% higher revenues estimated at the beginning of the reporting cycle.
Stocks in Focus
Five big retailers will report earnings results this week. Each of these stocks carries a Zacks Rank #3 (Hold) and has a positive Earnings ESP. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Our research shows that for stocks with the combination of a Zacks Rank #3 or better and a positive Earnings ESP, the chance of an earnings beat is as high as 70%. These stocks are anticipated to appreciate after their earnings releases. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
The chart below shows the price performance of five stocks in the last quarter.
Image Source: Zacks Investment Research
Advance Auto Parts provides automotive replacement parts, accessories, batteries, and maintenance items for domestic and imported cars, vans, sport utility vehicles, and light and heavy-duty truck. AAP’s efforts to expand and optimize its footprint by opening new stores, widening online presence and strategic collaborations are expected to boost its prospects.
The multi-year agreement with Bridgestone for DieHard batteries is set to aid Advance Auto Parts’ top-line growth. AAP’s strong balance sheet and commitment to return shareholder capital are praiseworthy.
Advance Auto Parts has an Earnings ESP of +4.91%. It has an expected earnings growth rate of 14.5% for the current year. The Zacks Consensus Estimate for current-year earnings improved 0.1% over the last 7 days.
AAP recorded earnings surprises in the last four reported quarters, with an average beat of 11.1%. The company is set to release earnings results on May 23, after the closing bell.
Best Buy operates as a retailer of technology products, services, and solutions in the United States, Canada, and Mexico. BBY has been benefiting from its omnichannel capabilities as well as investments in new membership program, technology, advertising and health strategy. These apart, Best Buy’s strong supply-chain expertise, flexible store operating model and the ability to shift quickly to the digital mode constantly support its performance.
Best Buy has an Earnings ESP of +0.43%. It has an expected earnings growth rate of 14.5% for the current year. BBY is set to release earnings results on May 24, before the opening bell.
AutoZone is one of the leading specialty retailers and distributor of automotive replacement parts and accessories in the United States. It operates in the Do-It-Yourself retail, Do-It-for-Me auto parts and products markets. AutoZone’s high-quality products, store-expansion initiatives and omni-channel efforts to improve customer shopping experience are boosting its market share.
The ramp-up of e-commerce efforts including ship-to-home next day, buy online, pick-up in stores and commercial customer ordering are aiding AutoZone’s top-line growth. The solid reputation of the Duralast brand, competitive pricing and greater engagement from store-operating teams are supporting its growth.
AutoZone has an Earnings ESP of +2.54%. It has an expected earnings growth rate of 17.3% for the current year (August 2022). The Zacks Consensus Estimate for current-year earnings improved 0.1% over the last 7 days.
AZO recorded earnings surprises in the last four reported quarters, with an average beat of 25.9%. The company is set to release earnings results on May 24, before the opening bell.
DICK’S Sporting Goods has been gaining from continued focus on developing every possible avenue to generate greater sales. As part of its long-term plan, DKS plans to make significant investments in e-commerce, technology, store payroll, Team Sports and private brands. DICK’S Sporting Goods remains on track to build the best omni-channel experience for athletes by strengthening store network and expanding e-commerce presence.
DICK’S Sporting Goods has an Earnings ESP of +2.43%. DKS recorded earnings surprises in the last four reported quarters, with an average beat of 102.5%. The company is set to release earnings results on May 25, before the opening bell.
Ulta Beauty has been benefiting from its omnichannel strength, thanks to efficient store and digital operations. ULTA’s skincare category has been gaining on consumers’ rising interest toward self-care. Further, management raised its fiscal 2021 guidance.
Ulta Beauty has been seeing market share gains in major beauty categories for a while now, with skincare standing out. Its foremost priority is to strengthen its omnichannel business and explore the potential of both physical and digital facets.
Ulta Beauty has an Earnings ESP of +5.16%. The Zacks Consensus Estimate for current-year earnings improved 0.1% over the last 7 days. ULTA recorded earnings surprises in the last four reported quarters, with an average beat of 67.8%. The company is set to release earnings results on May 26, after the closing bell.
Stay on top of upcoming earnings announcements with the Zacks Earnings Calendar.
5 Stocks Set to Double
Each was handpicked by a Zacks expert as the #1 favorite stock to gain +100% or more in 2021. Previous recommendations have soared +143.0%, +175.9%, +498.3% and +673.0%.
Most of the stocks in this report are flying under Wall Street radar, which provides a great opportunity to get in on the ground floor.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.