In This Article:
Note: The following is an excerpt from this week’s Earnings Trends report. You can access the full report that contains detailed historical actual and estimates for the current and following periods, please click here>>>
Here are the key points:
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Total Q3 earnings for the 469 S&P 500 members that have reported results through Wednesday, November 20th, are up +6.5% on +5.2% higher revenues, with 73.8% beating EPS estimates and 61.4% beating revenue estimates. The reporting cycle has ended for half of the 16 Zacks sectors.
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Looking at Q3 as a whole, combining the actual results from the 469 index members that have reported with estimates for the still-to-come companies, total S&P 500 earnings are currently expected to be up +7.7% from the same period last year on +5.6% higher revenues.
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Earnings growth is expected to accelerate after the modest growth pace in Q3, with double-digit earnings growth projected in three of the next four quarters.
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For 2024 Q4, total S&P 500 earnings are currently expected to be up +7.7% from the same period last year on +4.9% higher revenues. Had it not been for the Energy sector drag, Q4 earnings for the rest of the index would be up +9.8%.
Are Target’s Woes Company Specific?
Target TGT disappointed once again, with the company not only missing estimates but also guiding lower. This is in sharp contrast to what we saw in Walmart’s WMT beat-and-raise quarterly report, where the company’s positive commentary about trends in its general merchandise category had raised hopes of strong results from Target.
Target is more exposed to discretionary product categories, while Walmart is more into must-have groceries. Discretionary product categories have struggled over the last two years as consumers favored travel, leisure, dining, and other ‘experiential’ services in the post-Covid period. This is the primary reason why Target shares have lagged Walmart and the broader market by so much, as the year-to-date chart shows.
Image Source: Zacks Investment Research
Target’s persistent earnings underperformance (this is the second of this year’s three quarterly releases that the company has disappointed in its results) is likely reflective of company-specific challenges and not simply a reflection of anemic demand for its merchandise.
Target’s same-store sales increased +0.3% while the same at Walmart increased +5.3%. Target’s digital sales increased +10.8% while Walmart’s increased +22% in the U.S. Target’s margins were down from the year-earlier period while Walmart's margins were up year over year.