Wal-Mart Kicks Off Retail Earnings With A Bang, Nordstrom Up Next

This morning, Wal-Mart (WMT) kicked off the last leg of Q4 earnings season in which a majority of the retailers report results. The largest retailer in the world put up EPS of $1.61, well ahead of the Estimize consensus of $1.56, and representing the biggest beat against Wall Street in 7 quarters.  Wal-Mart failed to reach top-line expectations, however, falling short by $1.07B. Same store sales growth for the quarter came in at 1.6% ex-gasoline, better than analysts were anticipating. With that said, like other multinationals, Wal-Mart faced significant headwinds due to the stronger dollar.

Perhaps the most surprising announcement made by Wal-Mart today was that beginning in April associates will earn at least $9 an hour which is $1.75 more than the current federal minimum wage, a change that will affect nearly 500k employees around the world. That number ticks up to $10 an hour for existing employees in 2016. This new compensation structure will of course impact the bottom-line in fiscal 2016, but improve the company’s public image with which they have struggled.

This afternoon we get results from Nordstrom (JWN). The Estimize consensus is calling for EPS of $1.38, a beat of $0.03. Revenues expectations of $4.0B are slightly lower than the Street.  Next week, 10 retailers (M, HD, DLTR, TJX, TGT, LOW, LB, RIG, KSS, GPS, ROST) from the S&P 500 will report earnings.

How are we doing?

Expectations for S&P 500 earnings growth for the fourth quarter stand at 6.1%. Revenues are anticipated to come in with 1.8% growth.

Leaders

Earnings:

Health Care (24.2%). Notable industry: Biotechnology (65.0%).

Information Technology (17.5%). Notable industry: Semiconductors (32.0%)

Revenues:

Health Care (10.5%). Notable industry: Biotech (42.8%).

Information Technology (8.5%). Notable industry: Tech Hardware, Storage & Peripherals (16.2%)

Laggards

Earnings:

Energy (-19.9%). Notable industry: Oil, Gas and Consumable Fuels (-21.4%)

Financials (-3.3%). Notable industry: Banks (-4.8%)

Revenues:

Energy (-13.8%). Notable industry: Oil, Gas and Consumable Fuels (­-16.0%).

Materials (-2.4%). Notable industry: Paper & Forest Products (­-18.0%).

Beat/Miss/Match

Earnings: With 419 S&P 500 companies reporting thus far, 55% have beaten the Estimize consensus, 37% have missed and 8% have met. This is compared to Wall Street estimates, of which 68% of companies have beat on the bottom­-line, 22% have missed and 10% have met.

Revenue: 49% have beaten the Estimize consensus, while 51% have missed. For revenues, 55% of companies have beat the Wall Street estimate, while 45% have missed.