Wal-Mart, Macy, Cisco and Deere are part of Zacks Earnings Preview:
CHICAGO, Aug. 11, 2014 /PRNewswire/ -- Zacks.com releases the list of companies likely to issue earnings surprises. This week's list includes Wal-Mart (NYSE:WMT-Free Report), Macy (NYSE:M-Free Report), Cisco (Nasdaq:CSCO-Free Report) and Deere & Company (NYSE:DE-Free Report).
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Tough Earnings Environment for Retail Sector
The Q2 earnings season has come to an end for 9 of the 16 Zacks sectors in the S&P 500. Except for the Retail sector, most of the other sectors are close to the finish line as well. The Retail sector still has plenty of reports to come, with results from only 21 out of the 43 total in the S&P 500 out already.
Overall, we will be getting results from 376 companies this week, including 16 S&P 500 members. By the end of this week, we will have seen Q2 results from almost 94% of the S&P 500 members (469 in total). This week's reports are heavily weighted toward the Retail sector, with major operators in the space like Wal-Mart (NYSE:WMT-Free Report), Macy's (NYSE:M-Free Report) and others coming out with Q2 results. Notable reports from other sectors include Cisco (Nasdaq:CSCO-Free Report) and Deere & Company (NYSE:DE-Free Report).
It has been a tough reporting cycle for the Retail sector, with most of the companies coming short of earnings estimates. Total earnings for 21 Retail sector companies in the S&P 500 that have already reported Q2 results are up +4.8% on +8.7% higher revenues, with only 33.3% beating earnings estimates and a respectable 57.1% coming ahead of top-line expectations.
The 33.3% earnings beat ratio for the sector is the weakest in the S&P 500 index, matching the sector's under-performance in the preceding quarter. But while Q1 was written off due to weather related issues, there is no handy excuse to fall back upon this time around. If anything, the performance thus far spotlights the extremely promotional retail environment that has been with us for quite some time and the impact that is having on the sector's margins. Retailers don't have so much of revenue problem – revenues are good enough. They have a margin problem, with the super competitive retail environment eating into their margins.
The Q2 Scorecard (as of Friday morning, August 8th)
Total earnings for the 453 S&P 500 members that have reported already are up +8.7% from the same period last year, with a 'beat ratio' of 65.8% and a median surprise of +2.6%. Total revenues are up +4.6%, with a revenue 'beat ratio' of 61.4% and a median surprise of 0.8%.
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