Snapshot of Retail Sector Profits as Inflation Climbs


Shares of Walmart WMT have been a rock of stability in the current market turmoil. You can see this in the chart below which shows the year-to-date performance of Walmart stocks against the S&P 500 index (green line) and the Zacks Retail sector (red line).

Image source: Zacks Investment Research

Part of the explanation for Walmart’s stock market stability is the nature of its business which provides a high degree of defense during times of economic instability and uncertainty. This almost “essential” aspect of Walmart’s business can also be seen in the recent stock market behavior of peers such as Costco COST, CVS CVS, Target TGT and others. That said, Walmart stocks have outperformed their peers year-to-date.

It will be interesting to see if Walmart and Target can sustain their recent performance momentum after this week’s quarterly reports, with reports from Walmart ahead of the market open on Tuesday, May 17.e and Target the next morning.

Walmart shares rose after the latest quarterly release on February 17eeven though he had to spend more to keep shelves stocked and stores staffed, with supply chain costs running $400 million more than he had anticipated and the surge in ‘Omicron dramatically increasing its Covid-specific paid leave costs.

Estimates for Walmart’s April quarter had fallen after the last quarterly release, but have since held steady, reflecting a greater degree of confidence in the company’s ability to weather current logistical challenges.

Turning to the retail sector’s first quarter 2022 earnings season dashboard, we now have results for 21 of the 34 retailers in the S&P 500 index. were down -24.1% compared to the same period last year, with revenue up +10.9%, with 61.9% beating EPS estimates and 76.2% beating earnings estimates income.

The comparison charts below put the first quarter beat percentages for these retailers in historical context.

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Image source: Zacks Investment Research

As you can see above, retailers have struggled to get any positive surprises so far.

In terms of earnings and revenue growth rates, Amazon’s weak numbers play a significant role in the industry’s strong year-over-year growth rate (Amazon is part of the Zacks Retail segment, and not from the Zacks Technology sector). The two comparison charts below show first-quarter earnings and revenue growth versus other recent periods, both with Amazon’s results (left chart) and without Amazon’s numbers ( right graph).

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Image source: Zacks Investment Research

This week’s statement file

We have over 200 companies on deck to report their results this week, including 16 members of the S&P 500. Notable companies reporting this week, in addition to the aforementioned retailers, include Cisco Systems CSCO, Deere & Company DE, Applied Materials AMAT and others.

The scoreboard for the first quarter 2022 earnings season

We now have first quarter results for 459 members of the S&P 500, or 91.8% of the total number of index members. Total profit for these companies was up +9.9% year-on-year on revenue up +14.8%, with 78.4% beating EPS estimates and 74.0% 9% exceeding revenue estimates.

The comparison charts below put the Q1 2022 earnings and revenue growth rates for these 459 index members in the context of what we had seen from the same group of companies in other periods. recent.

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Image source: Zacks Investment Research

The comparison charts below show Q1 EPS and revenue percentages for these 459 index members in historical context.

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Image source: Zacks Investment Research

Beat percentages were previously trailing their lowest levels in recent quarters, but have improved significantly since then.

Looking at the first quarter as a whole, with actuals for these 459 index members and estimates for upcoming companies, total profit is expected to increase by +9.3% on revenues up by +13.3%.

Excluding the -15.1% decline in financial sector profits, the index’s growth rate improves to +17%. On the other hand, the Energy sector has a very robust earnings profile at present, with the sector generating +239% additional earnings over the prior year period on revenues up + 60.1%.

Excluding the strong contribution from the energy sector, earnings for the rest of the index would only rise by +3.3% on revenues up by +9.9%.

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Image source: Zacks Investment Research

The chart below shows the comparable picture on a yearly basis.

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Image source: Zacks Investment Research

For a detailed look at the overall earnings picture, including expectations for the coming periods, please see our weekly earnings trends report >>>> A stable earnings picture despite the market sell-off

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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.


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