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Vitalii Liubimov's Avatar
published in Blogs
Nov 11, 2019

Time for retailers to step in to the earnings confessional

Walmart (NYSE: WMT) is scheduled to report earnings before the open this Thursday, November 14 and that will kick off a stretch of big earnings reports from various retailers over a short period of time. Over the course of five trading days we will get reports from Walmart, Home Depot (NYSE: HD), Kohls (NYSE: KSS), TJX Companies (NYSE: TJX), Lowes (NYSE: LOW), and Target (NYSE: TGT).

The six stocks listed are from different segments of the retail industry, but we see in the table below that there are some really good fundamental and technical statistics for the group as a whole. This particular table shows the different categories from Investor's Business Daily and we see lots of green, or positive notations. Two stocks in particular have dark green notations across the board—Home Depot and TJX. The dark green notations mean that the company ranks in the top 20th percentile in that category.

We see that Lowes and Target are green across the board, but they both have SMR ratings that are B's and that is just a notch below the grades of Home Depot and TJX.

The only stock that has any below average ratings is Kohl with a composite reading of only 30 and a Relative Price Strength rating of 26, both in the 21 to 40 percentile range. Walmart has an average EPS rating and an average SMR rating.

The table of Tickeron's Fundamental indicators shows more strong fundamentals for the group, but is also highlights a few more areas of concern than what we saw in the IBD table. Once again we see that Home Depot's numbers are tagged with green highlights across the board, but in this case it is the only stock with such a distinction.

The valuation ratings for Lowes and TJX are concerns, the Profit vs. Risk rating for Kohls is a concern, and Walmart's P/E Growth rating is a concern. The SMR rating from Tickeron for Walmart is also a concern.

Target shows pretty solid results across the board with only its SMR rating being average.

Finally, we have the sentiment table for these six retailers and what we see is that Kohls shows the most pessimism with both the analysts' ratings and the short interest ratio showing more bearish sentiment than the average stock. The most surprising item in the sentiment table is the fact that the analysts' ratings for Home Depot are below average. The overall buy percentage is at 57.6% while the average buy percentage falls in the 65% to 75% range.

The only areas where the sentiment is below average are the short interest ratios for Lowes and Target, but those indicators are only slightly below average.

Overall I would say that the fundamental picture looks pretty strong for the retail sector. The consumer has been the backbone of the economy in the last few years. Corporate spending has been declining in recent years and it has been the consumer that has kept the expansion going.

In addition to all of the earnings reports due out in the next week or so, the Retail Sales report for October is due out on November 15. The September report came in weaker than expected, so investors will be watching the October report a little more closely.

As for the retailers mentioned in this article, Home Depot looks to be on the most solid footing as we head into the reporting period.

Related Ticker: HD

Momentum Indicator for HD turns negative, indicating new downward trend

HD saw its Momentum Indicator move below the 0 level on May 20, 2024. This is an indication that the stock could be shifting in to a new downward move. Traders may want to consider selling the stock or exploring put options. Tickeron's A.I.dvisor looked at 90 similar instances where the indicator turned negative. In of the 90 cases, the stock moved further down in the following days. The odds of a decline are at .

Price Prediction Chart

Technical Analysis (Indicators)

Bearish Trend Analysis

The Moving Average Convergence Divergence Histogram (MACD) for HD turned negative on May 23, 2024. This could be a sign that the stock is set to turn lower in the coming weeks. Traders may want to sell the stock or buy put options. Tickeron's A.I.dvisor looked at 51 similar instances when the indicator turned negative. In of the 51 cases the stock turned lower in the days that followed. This puts the odds of success at .

Following a 3-day decline, the stock is projected to fall further. Considering past instances where HD declined for three days, the price rose further in of 62 cases within the following month. The odds of a continued downward trend are .

The Aroon Indicator for HD entered a downward trend on May 06, 2024. This could indicate a strong downward move is ahead for the stock. Traders may want to consider selling the stock or buying put options.

Bullish Trend Analysis

The RSI Oscillator points to a transition from a downward trend to an upward trend -- in cases where HD's RSI Oscillator exited the oversold zone, of 26 resulted in an increase in price. Tickeron's analysis proposes that the odds of a continued upward trend are .

The Stochastic Oscillator shows that the ticker has stayed in the oversold zone for 3 days. The price of this ticker is presumed to bounce back soon, since the longer the ticker stays in the oversold zone, the more promptly an upward trend is expected.

Following a 3-day Advance, the price is estimated to grow further. Considering data from situations where HD advanced for three days, in of 364 cases, the price rose further within the following month. The odds of a continued upward trend are .

HD may jump back above the lower band and head toward the middle band. Traders may consider buying the stock or exploring call options.

Fundamental Analysis (Ratings)

Fear & Greed

The Tickeron SMR rating for this company is (best 1 - 100 worst), indicating very strong sales and a profitable business model. SMR (Sales, Margin, Return on Equity) rating is based on comparative analysis of weighted Sales, Income Margin and Return on Equity values compared against S&P 500 index constituents. The weighted SMR value is a proprietary formula developed by Tickeron and represents an overall profitability measure for a stock.

The Tickeron Profit vs. Risk Rating rating for this company is (best 1 - 100 worst), indicating low risk on high returns. The average Profit vs. Risk Rating rating for the industry is 77, placing this stock better than average.

The Tickeron PE Growth Rating for this company is (best 1 - 100 worst), pointing to consistent earnings growth. The PE Growth rating is based on a comparative analysis of stock PE ratio increase over the last 12 months compared against S&P 500 index constituents.

The Tickeron Seasonality Score of (best 1 - 100 worst) indicates that the company is fair valued in the industry. The Tickeron Seasonality score describes the variance of predictable price changes around the same period every calendar year. These changes can be tied to a specific month, quarter, holiday or vacation period, as well as a meteorological or growing season.

The Tickeron Price Growth Rating for this company is (best 1 - 100 worst), indicating fairly steady price growth. HD’s price grows at a lower rate over the last 12 months as compared to S&P 500 index constituents.

The Tickeron Valuation Rating of (best 1 - 100 worst) indicates that the company is significantly overvalued in the industry. This rating compares market capitalization estimated by our proprietary formula with the current market capitalization. This rating is based on the following metrics, as compared to industry averages: HD's P/B Ratio (344.828) is very high in comparison to the industry average of (11.594). P/E Ratio (24.357) is within average values for comparable stocks, (36.073). Projected Growth (PEG Ratio) (2.045) is also within normal values, averaging (2.519). Dividend Yield (0.023) settles around the average of (0.033) among similar stocks. P/S Ratio (2.415) is also within normal values, averaging (89.086).

Notable companies

The most notable companies in this group are Home Depot (NYSE:HD), Lowe's Companies (NYSE:LOW), AutoZone (NYSE:AZO), Tractor Supply Company (NASDAQ:TSCO), Ulta Beauty (NASDAQ:ULTA), Best Buy Company (NYSE:BBY), Bath & Body Works (NYSE:BBWI), Five Below (NASDAQ:FIVE), RH (NYSE:RH), Advance Auto Parts (NYSE:AAP).

Industry description

The specialty stores sector includes companies dedicated to the sale of retail products focused on a single product category, such as clothing, carpet, books, or office supplies. A specialty store could face intense competition from big-box departmental chains, and therefore offering an adequate collection of the product type it specializes in is key in maintaining/growing its market.

Market Cap

The average market capitalization across the Specialty Stores Industry is 8.24B. The market cap for tickers in the group ranges from 48 to 380.15B. HD holds the highest valuation in this group at 380.15B. The lowest valued company is CALI at 48.

High and low price notable news

The average weekly price growth across all stocks in the Specialty Stores Industry was -0%. For the same Industry, the average monthly price growth was 8%, and the average quarterly price growth was 36%. KTYCF experienced the highest price growth at 52%, while CZOOF experienced the biggest fall at -99%.

Volume

The average weekly volume growth across all stocks in the Specialty Stores Industry was -28%. For the same stocks of the Industry, the average monthly volume growth was 136% and the average quarterly volume growth was 351%

Fundamental Analysis Ratings

The average fundamental analysis ratings, where 1 is best and 100 is worst, are as follows

Valuation Rating: 44
P/E Growth Rating: 56
Price Growth Rating: 58
SMR Rating: 70
Profit Risk Rating: 77
Seasonality Score: 12 (-100 ... +100)
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General Information

a retailer of assortment of building materials and home improvement products

Industry SpecialtyStores

Profile
Fundamentals
Details
Industry
Home Improvement Chains
Address
2455 Paces Ferry Road
Phone
+1 770 433-8211
Employees
463100
Web
https://www.homedepot.com
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