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Tuesday, November 17
Wednesday, November 18
Home Depot (HD)
Consumer Discretionary – Specialty Retail | Reports November 17, before the open.
The Estimize community is looking for EPS of $1.35, a decent bit higher than Wall Street’s expectation for $1.32. Estimize is also looking for higher revenues of $21.82B vs. the Street’s $21.74B.
What to watch: This week we get a further read on the health of the US consumer and their willingness to make large ticket purchases for their homes. The housing sector performed well throughout the third quarter, however New Home Sales fell in September. Homebuilders such as D.R. Horton released better than expected results last week, also boding well for the home improvement retailers. While consumers have more money in their pockets due to an improving jobs situation and lower oil prices, they have been very choosy with how they allocate their discretionary income. Home prices remain high, and as prices appreciate consumers typically invest in their properties. During the first half of the year, Home Depot reported solid same store sales of 6%, as well as increased customer traffic and average guest spend. The home improvement retailer continues to steal market share from it’s main competitor, Lowe’s, which is still dealing with negative headlines from carrying Chinese laminate flooring that contained formaldehyde, a possible carcinogen. Home Depot also only has domestic locations, while Lowe’s has stores in Mexico and Canada and could suffer from the stronger dollar.
Wal-Mart (WMT)
Consumer Staples – Food Staples and Retailing | Reports November 17, before the open.
The Estimize consensus calls for EPS of $0.98, in-line with Wall Street, but one penny below corporate guidance. Revenues are nearly in-line at $117.64.
What to expect: On October 14th the world’s largest retailer announced that full-year sales would be flat, a drop in what was previously expected. The company blamed the decrease in guidance on the strong U.S. dollar and increases in costs such as employee wages. Wal-Mart announced in February that they were raising their entry wage to $9 an hour, and that by February 2016 all employees would earn at least $10/hour. In the wake of the announcement on lower guidance, the stock plunged 10% to a three year low as investors became leery of the excuses given by the retailer. Competition from Amazon has become almost too much for Wal-Mart to bear, and as such they are planning to funnel over $1B into ecommerce and digital platforms next year in order to combat sluggish sales and slowing traffic. Wal-Mart began offering an unlimited shipping membership for $50 annually, but does not offer the other perks of Amazon Prime. Since the October 14th announcement, Estimize EPS expectations for fiscal Q3 2016 have dropped 3 cents and revenues are down $553M.
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