Business

4 retail stocks with a high probability of beating earnings


Although earnings season has peaked, the bulk of the retail and wholesale sector releases are yet to come. This report cycle, the sector likely saw a slight uptick in sales as soaring inflation pinched consumers’ pockets. Additionally, a lack of stimulus this year may have weighed on demand to some extent.

Rising gas and food prices have forced consumers to limit their spending on big-ticket items. Growing cost pressures amid logistical bottlenecks, a tight labor market and increased promotional activity put margins in the spotlight. However, retailers re-engaged with customers, reviewed prices, updated assortments and reduced costs where possible.

Despite the prevailing headwinds, the retail sector likely benefited from lower unemployment and steady wage gains. Industry experts also pointed out that the price hike might have forced customers to look for budget options. Therefore, industry participants came up with unique products and better deals.

Companies have taken a more consumer-centric approach, emphasizing membership programs, upgrading store technology, mobile app shopping and last-mile delivery solutions. Expedited delivery services like door-to-door delivery, curbside pickup or online buy and in-store pickup, as well as contactless payment solutions, have helped maximize a share of customer wallet.

According to the latest earnings outlook from Zacks, the sector is expected to have experienced 7.2% year-over-year revenue growth in the second quarter of 2022. This follows a 6.6% increase % over the previous season and jumped 13.8% over the year. there is a period. Meanwhile, net income is expected to be down 22.1% this earnings season. The sector saw a 17.5% decline in profits in the last reporting cycle and a 46% increase in the year-ago quarter.

Make the perfect choice

Our research shows that for stocks with the combination of a positive ESP on earnings and a Zacks rank of #1 (strong buy), 2 (buy), or 3 (hold), the probability of a positive surprise on profits can reach 70%. You can discover the best stocks to buy or sell before they’re flagged with our earnings ESP filter.

4 important choices

Dollar General Corporation DG deserves a mention. The stock has a Zacks rank of No. 2 and an ESP on earnings of +0.99%. Zacks’ consensus estimate for its second-quarter fiscal 2022 earnings is set at $2.92 per share. The earnings consensus mark has risen by pennies over the past 30 days. DG has a surprise on earnings for the last four quarters of 2.8% on average. You can see the full list of today’s Zacks #1 Rank stocks here.

Better prices, private label offers, efficient inventory management and merchandise initiatives have helped the performance of this Goodlettsville, TN based company. These, along with the focus on consumable and non-consumable categories, are noteworthy. Dollar General offers “better for you” products at affordable prices. Additionally, it expanded its refrigeration facilities to boost the sale of perishable items. Company initiatives such as DG Fresh, Fast Track and digitization likely boosted comparable store sales. Dollar General is expected to release earnings Aug. 25 before the market opens.

Dollar General Corporation Price, Consensus, and EPS Surprise

Dollar General Corporation price-consensus-eps-surprise-chart | Quote from Dollar General Corporation

Ulta Beauty, Inc. ULTA, with Zacks Rank #2 and ESP Earnings of +3.27%, is worth betting on. Zacks’ consensus estimate for its second-quarter fiscal 2022 earnings per share is set at $4.84. The consensus earnings estimate rose 1.3% over the past 30 days. This beauty retailer and premier beauty destination for cosmetics, fragrances, skin care products, hair care products and salon services has a surprise last four quarter earnings of 49.8 %, on average.

Ulta Beauty strengthened its omnichannel business and explored the potential of physical and digital facets. He has implemented various tools to improve the customer experience, such as offering a virtual try-on tool and in-store training and reinventing fixtures, among others. Ulta Beauty is focused on providing customers with a curated and exclusive range of beauty products through innovation. The company is expected to release its financial figures on August 25 after the market closes.

Ulta Beauty Inc. Price, Consensus and EPS Surprise

Ulta Beauty Inc. Price, Consensus and EPS Surprise

Ulta Beauty Inc. price-consensus-eps-surprise-chart | Quote from Ulta Beauty Inc.

You can consider Abercrombie & Fitch Co. ANF, which has a Zacks Rank #3 and a +15.39% Earnings ESP. Zacks’ consensus estimate for its second-quarter fiscal 2022 earnings per share is set at 26 cents. The consensus mark has remained stable over the past 30 days. ANF ​​has a negative surprise over the last four quarters of 73.8% on average.

Abercrombie & Fitch’s focus on brand growth, leveraging omnichannel capabilities and increasing digital penetration were key drivers. The company benefited from the continued strength of the Abercrombie & Fitch brand. It also remains on track to streamline the store base by reducing reliance on underperforming tourist sites. Abercrombie & Fitch is expected to release earnings Aug. 25 before market open.

Abercrombie & Fitch Company Price, Consensus, and EPS Surprise

Abercrombie & Fitch Company Price, Consensus, and EPS Surprise

Abercrombie & Fitch Company price-consensus-eps-surprise-chart | Abercrombie & Fitch Company Quote

Investors can rely on Children’s Place, Inc. PLCE, the specialist children’s apparel retailer, with a Zacks #3 ranking and +1.03% ESP gain. Zacks’ consensus estimate for earnings per share for the second quarter of fiscal 2022 has been flat at 97 cents over the past 30 days. PLCE has a surprise on earnings for the last four quarters of 58%, on average.

The Children’s Place accelerated the fleet optimization initiative, directing resources to digital platforms to better engage with customers, increasing supply chain and taking pricing action. He focused on the “Superior Product” strategy to resonate with millennial customers and advance omnichannel capabilities. The Children’s Place is expected to release its financial figures on August 17 before the market opens.

The Children’s Place, Inc. Price, Consensus, and EPS Surprise

The Children's Place, Inc. Price, Consensus, and EPS Surprise

The Children’s Place, Inc. price-consensus-eps-surprise-chart | Quote from The Children’s Place, Inc.

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Dollar General Corporation (DG): Free Stock Analysis Report

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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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