EC What Is Weighing On Macy's (M) And Other Department Store Stocks?

The other major retailer releasing results this week is Wal-Mart (WMT - Free Report) , which reports Thursday May 16th before the market’s open. Wal-Mart’s travails are not as severe as Macy’s, but it is going through its own transition that requires active investments and that is weighing on its margins. The stock has lagged the market this year, up +9% vs. +14% for the S&P 500 index.

Chinese online retailer Alibaba (BABA - Free Report) is the major earnings release this week, as are Cisco (CSCO - Free Report) , Nvidia (NVDA - Free Report) and Deere & Company (DE - Free Report) . In total, we have almost 250 companies releasing results this week, including 9 S&P 500 members.

Q1 Earnings Season Scorecard (as of Friday, May 10th)

We now have Q1 results from 450 S&P 500 members or 90% of the index’s total membership. Total earnings for these 450 companies are up +0.6% from the same period last year on +5% higher revenues, with 77.1% beating EPS estimates and 59.3% beating revenue estimates.

The proportion of these companies beating both EPS and revenue estimates is 51.3%.

Here are the three trends that are clearly visible this earnings season

First, the growth challenge is very real. This is no surprise and has been well known for a while now, giving rise to the so-called ‘earnings recession’ narrative. Regular readers know our views about the so-called ‘earnings recession’ narrative this year. For reference, check out >>>> Earnings Recession Fears Are Exaggerated

The comparison chart below puts the earnings and revenue growth pace for these 450 index members in historical context.

This tough comparison on the growth front is due to the tax-cut boost to corporate profitability in 2018. The growth picture is expected to start improving in the second half of the year and accelerating into next year, with full-year 2020 earnings growth for the index reaching double digits after a +2% growth in 2019.

The moderation in this year’s growth also reflects the deceleration in global economic growth. The global GDP growth picture appears to have stabilized and even started improving in China and some other parts, but the pace is nevertheless expected to be below what we experienced in the last two years.

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For an in-depth look at the overall earnings picture and expectations for Q1, please check out our weekly Earnings Trends report  more

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