ETFs
Focus on retail ETFs ahead of first quarter big box results
The retail sector is now in focus with the release of earnings from major retailers like Wal-Mart WMT, Home Depot HD, Lowe’s LOW and Target TGT, as well as chain stores like Nordstrom JWN and Kohl’s KSS to come.
So far, 21 of the 34 retailers in the S&P 500 index have already released a report. These companies’ earnings are up 54.5% from the same period last year, with revenue up 7.4%, with 66.7% beating EPS estimates and 57.1 % exceeding revenue estimates. Overall, the retail sector is expected to report 24.7% earnings growth on 4.7% revenue growth (read: 5 Favorite Sector ETFs for Q1 Earnings).
This is why traditional retail ETFs are the center of attention. SPDR S&P Retail ETF XRT and VanEck Vectors Retail ETF RTH has lost a modest 0.08% and 0.8%, respectively, so far this year.
What our model reveals for retailer revenue
According to our methodology, the combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy), or 3 (Hold) increases the odds of beating earnings. You can discover the best stocks to buy or sell before they’re released with our Earnings ESP filter.
Wal-Mart has an Earnings ESP of +1.65% and a Zacks Rank #3. The company has not seen any revisions to its earnings estimates over the past 30 days for the upcoming quarter. Wal-Mart reported a four-quarter average earnings surprise of 7.33%. Wal-Mart is expected to release its report on May 16, before the market opens (see: all consumer discretionary ETFs here).
Home Depot has an Earnings ESP of 0.00% and a Zacks Rank #4 (Sell). The company has not seen any revisions to its earnings estimates over the past 30 days for the upcoming quarter. It delivered an average profit surprise of 1.98% over the last four quarters. Home Depot is expected to release its report on May 14, before the market opens.
Target has an Earnings ESP of -1.61% and a Zacks Rank #2. The company recorded no revisions to its earnings estimates over the past month for the to-be-reported quarter and posted a profit surprise of 27.13% for the trailing four quarters. Target will report results on May 22 before the opening bell.
Lowe’s has an Earnings ESP of 0.00% and a Zacks Rank #4. The company has not seen any earnings estimate revisions over the past 30 days for the to-be-reported quarter and has delivered an earnings surprise of 3.18%, on average, over the past four quarters. LOW is expected to release its results on May 28.
Nordstrom has an Earnings ESP of +66.67% and a Zacks Rank #3. The earnings estimate was revised negatively by a penny for the to-be-reported quarter over the past seven days. The company delivered a profit surprise of 86.00% on average over the last four quarters. It is scheduled to release its results on May 30 after the closing bell.
Kohl’s has an Earnings ESP of +121.95% and a Zacks Rank #3. There were no revisions to earnings estimates for the upcoming quarter over the past seven days. Kohl’s has reported an average negative earnings surprise of 84.2% over the past four quarters. The company is expected to report before the opening bell on May 30.
The story continues
Focus on ETFs
SPDR S&P Retail ETF (XRT)
The SPDR S&P Retail ETF tracks the S&P Retail Select Industry Index, which provides exposure to large-, mid-, and small-cap stocks. He holds 79 well-diversified stocks in his basket, none of which represents more than 2% of the shares. Additionally, the SPDR S&P Retail ETF is well distributed across various sectors with double-digit allocation in each of Apparel Retail, Specialty Retail, Automotive Retail and retail (read: 4 ETFs and sector stocks likely to benefit despite poor employment data).
The SPDR S&P Retail ETF is the largest and most popular in the retail industry, with $539.8 million in assets under management and an average trading volume of 6 million shares. It charges 35 basis points in annual fees and has a Zacks ETF Rank #2 with a Medium Risk Outlook.
VanEck Vectors Retail ETF (RTH)
The VanEck Vectors Retail ETF provides exposure to the 26 largest retail companies by tracking the MVIS US Listed Retail 25 Index, which measures the performance of companies involved in retail distribution, wholesalers, online retailers, direct mail and television, multi-line retailers, specialty retailers. food and other commodity retailers and retailers. The VanEck Vectors Retail ETF is heavily focused on the top company with over 22% exposure, while other companies hold no more than 9% of the shares.
VanEck Vectors Retail ETF has amassed $205.7 million in its asset base and charges 35 basis points in annual fees. It trades in a lower volume of 6,000 shares per day on average. The VanEck Vectors Retail ETF has a Zacks ETF Rank #2 with a Medium Risk Outlook.
Want the latest recommendations from Zacks Investment Research? Today you can download the 7 best stocks for the next 30 days. Click to get this free report
Target Corporation (TGT): Free Stock Analysis Report
Kohl’s Corporation (KSS): Free Stock Analysis Report
Walmart Inc. (WMT): Free Stock Analysis Report
Lowe’s Companies, Inc. (LOW): Free Stock Analysis Report
The Home Depot, Inc. (HD): Free Inventory Analysis Report
Nordstrom, Inc. (JWN): Free Stock Analysis Report
SPDR S&P Retail ETF (XRT): ETF Research Reports
VanEck Retail ETF (RTH): ETF Research Reports