F4 yield cycle continues: Retail results in the focus

The focus of the profit is still on retail, with several Bellwether operators in Deck report the results this week, including Target TGT, Best Buy Bby, Costco Costs, Macy's M and others.

The previous profit publications offer a calming view of consumer expenses, whereby wide expenditure trends are largely stable and in the inline what we have seen in the last quarters. While the latest measurements for the trust of consumers show a withdrawal in this important measure, the relatively longer trend remains favorable, which reflects the robust labor market and the steady wages.

In the last quarters, we have found that accumulated inflation was a burden on consumer expenses. This was particularly remarkable at the lower end of the distribution of income, but caused most consumers to be value -oriented and mainly output for basics. The expenses for permanent goods and other categories for discretionary goods were anemic in the last quarters, and we will find a further confirmation of this trend in the results of the target and best -Buy results of this week.

The following table shows the one -year performance of target (blue line; around -19%), best buy (orange line; to +11.1%), costco (red line; up to +37.8%) and the S&P 500 index (green line; up to +16.6%).

Zacks Investment Research

Image source: Zacks Investment Research

As you can see above, the Target shares had fallen a long way after the last quarterly publication on November 20^TH If it missed all estimates, including COMPS. Management had given positive sales dynamics in the first two months of the quarter at the update in mid -January. However, the demand trends were raised in January, and this trend was probably continued in February.

The expectation for the goal will specify a profit of $ 2.24 per share for income of $ 30.77 billion, which represent changes of -24.8% or -3.6% compared to the previous year. The estimates were modest after the management update from mid-January, but have remained unchanged since then. It is expected that the COMPS will be overwhelmed by +1.2%, which would follow the disappointing exhibition of the company in this count in the previous period than it emerged with +0.30%comp -growth compared to expectations of +1.53%.

Since Target shares are near their 52-week low, the mood is probably weak enough to limit further downward risks. In view of the history of the shares of big steps in quarterly publications, it would probably not take much for the share to be higher after the earnings pressure on Tuesday morning.

Best Buy is expected to achieve an EPS of $ 2.39 on Tuesday morning for $ 13.65 billion in the amount of -12.1% or -6.8%. With regard to sales in the same business, the expectation for a decline of -1.54%, which will follow the decline of -2.9% in the last quarter of the year on November 26th^TH. The share had dropped after the publication in November because the Q3 comprise had given the expectations to a large extent.

All the signs are that the Q4 results of Best Buy represent a sequential improvement, with active advertising actions juice the sales activities during the holidays. However, there are no escaping in absolute figures for the general weakness, since the income in 2024 (financial year in January 2025) of $ 41.2 billion has dropped by -5.1% compared to the previous year. In fact, the income since the Covid summit of 2021 (financial year, which decreases in January 2022) of $ 51.76 billion. In the following years, the income in 2022 in the amount of $ 46.3 billion (the financial year ending in January 2023), 43.5 billion US dollars in 2023 and the above US dollars in 2024, amounted to in 2023.

The expectation is that the income will begin with increasing growth this year, with the current Zacks consensus estimate of 41.76 billion US dollars a profit of +1.3%. While the demand for most categories of Best Buy's Appliance and other permanent categories remains weak, the prospects of demand for computers and smartphones remains favorable and reflect new AI-centered offers and typical product exchange. We have already seen some of them in the past, and this quarter probably experienced an acceleration in this trend. The inline performance of the share with the wider market reflects this constructive view.

Costco was a real category leader with a customer group with a higher incomes that is loyal to the company's value offerings. This fact was re -confirmed by the company's sales data in January in January, whereby the company -wide COPS for the month +7.5%, which corresponds to a profit of the traffic of +7.1% and an average ticket price of +0.4%.

Costco is expected to report a profit of 4.09 USD per share for income of $ 63.2 billion per share, which corresponds to +10.2% or +63.2% compared to the previous year. The estimates have increased since the quarter, with the current estimates of $ 4.06 per month and 3.97 USD increased three months ago. The profits and income of Costco in the current financial year (ends in August 2025) are expected to increase by +11.9% or +7.4% compared to the previous year's level. The company is still well positioned in order to maintain this growth dynamics the following year on the back of the mid-single-digit compromise and the growth of the income of member fees in high-catchy digits.

With regard to the The 2024 winning season in retail sector 2024 ScorecardWe now have results of 26 of the 33 retailers in the S&P 500 index. Regular readers know that Zacks has a special independent economic sector for the retail area, which, in contrast to the placement of the room, is located in the sectors of consumers and consumer discrettion in the standard industry classification of Standard & Poor. The Zacks individual trade sector includes Target, Best Buy and other traditional retailers, online providers such as Amazon (AMZN) and restaurant players.

The total income of the fourth quarter for these 26 retailers who have registered are by +32.2% compared to +6.9% higher income compared to the same period of the previous year, 73.1% exceeded the EPS estimates and the same proportion of sales estimates.

In the following comparison tables, the fourth quarter is exceeded for these retailers in a historical context.

Image source: Zacks Investment Research

As you can see above, the proportion of these companies that defeat consensus -EPS ESPS estimates is a remarkable improvement compared to what we saw from this group of companies the retail sector in the previous quarters, but otherwise remains below average for the previous 20 quarters. Turnover transfers the percentage of this group of companies to other recent periods and the historical average.

With regard to the increased profit growth rate at this point, we show the performance of the group with and without Amazon, the results of which are among the 26 companies that have already reported. As we know, the result of Amazon rose by +86.9% at +10.5% higher income in the fourth quarter, since it exceeded EPS and sales expectations.

The following two comparison tables show the result and the growth of sales of Q4 in relation to other recent periods, both with the results of Amazon (left side) and without Amazon number (right -hand diagram))

Image source: Zacks Investment Research

As you can see above, most of the profit growth in this stage for the retail sector of Amazon, whereby the fourth result for the rest of the group has only achieved sales of +4.9% on sales of +5.3%. There is a decent top line growth itself on an ex-Amazon basis, which effectively reflects the inflation trends in the economy.

Q4 profit season scorecard

Until Friday, February 28th^THWe saw the fourth quarter of 485 S&P 500 members or 97% of the overall membership of the index. The total income for these companies rose by +14.9% compared to the previous year compared to +5.9% higher income, 76.3% beat EPS estimates and 65.4% against sales estimates.

In the following comparison diagrams, profit and sales growth rates in the fourth quarter with regard to other recent periods for the same group of index members are given.

Image source: Zacks Investment Research

In the following comparison tables, the Q4 EPS and sales in relation to other recent periods for the same group of companies are exceeded.

Image source: Zacks Investment Research

The income with a big picture

The following diagram shows the expectations for profits and sales growth in the fourth quarter in the context of growth in the previous four quarters and what is expected in the coming four quarters.

Image source: Zacks Investment Research

With the exception of the Mag 7 company's contribution, the result of the fourth quarters for the rest of the S&P 500 index would increase by +10.1% at +4.7% higher income.

The following diagram shows the total profit for calendar year, whereby the double -digit profit growth is expected to be expected in 2025 and 2026.

Image source: Zacks Investment Research

For a detailed insight into the overall profit, including expectations for the upcoming period

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This article was originally published in Zack's Investment Research (Zacks.com).

Zacks Investment Research

F4 yield cycle continues: Retail results in the focus

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