Retail ETFs In Focus Post Q1 Earnings

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The overall earnings picture for the retail sector this season has been solid. Total earnings from 64.7% of the sector’s total market capitalization reported so far are up 61.2% on 12.7% higher revenues, with 90.9% beating EPS estimates and 81.8% beating top-line estimates. The growth pace and earnings surprise are well above the four-quarter average while the revenue beat is slightly lower than the four-quarter average.

Robust earnings were driven by cheap money, rapid COVID-19 vaccination, and business re-openings that spurred consumer spending, leading to an increase in retail sales. As such, most of the traditional brick-and-mortar retailers came up with stronger-than-expected results with a both a top and bottom-line beat though a few lost in terms of share value.  

Let’s dig into the details of some of the earnings releases.

Earnings in Focus

Big-box retailer Target (TGT - Free Report) jumped 7.4% following the earnings announcement. It topped the Zacks Consensus Estimate for earnings and revenues by $1.43 and $1.9 billion, respectively. The company has surpassed earnings estimates every time since the October quarter of 2018.

On the other hand, the world's largest retailer, Wal-Mart (WMT - Free Report) topped earnings estimates by 47 cents and revenue estimates by $7 billion. While the solid trend toward online shopping is expected to continue, demand at brick-and-mortar stores will also rise as more Americans get vaccinated and move freely. Share price of WMT rose 2.2% in response to its earnings announcement.

The second-largest home improvement retailer, Lowe’s (LOW - Free Report) beat estimates for earnings by 63 cents and revenues by $763 million. The stock inched up 0.3% in response to its earnings announcement. Meanwhile, shares of Home Depot (HD - Free Report), the world's largest home improvement retailer, plunged 1.7% in response to its earnings announcement. Earnings per share of $3.86 surpassed the Zacks Consensus Estimate of $3.04 while revenues outpaced the consensus mark by $2.6 billion.

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