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As Q1 earnings season comes to a close, retailers present a mixed bag of results while optimistic economic data emerges
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Nvidia, the AI standout, prepares to reveal its quarterly performance
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Notable earnings dates remaining include Kohl’s (KSS) and Bath & Body Works
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This week, a total of 867 companies are slated to announce their earnings
Positive Shift in Economic Indicators
Chatter on Wall Street last week revolved around recent economic data, highlighting a tad relief in inflation concerns. The latest Consumer Price Index (CPI) figures for April indicate a slight easing of price pressures. Compared to expectations, the CPI showed a 0.3% month-on-month increase in April, a modest drop from the 0.4% uptick in March.
Similarly, Retail Sales data suggested a slowdown in consumer spending with April showing no growth, contrary to the projected 0.4% monthly increase. Wall Street reacted positively to these developments, as inflation metrics align more closely with the Fed’s targets, potentially paving the way for timely rate adjustments.
The Dow, S&P 500, and Nasdaq basked in record highs mid-week, with the Dow even flirting with the elusive 40,000 mark on Thursday.
Retail Revelations: A Tale of Contrasts
The final earnings reports from retailers portrayed a realm of contradictions within the industry. Home Depot initiated the week with a mixed bag, surpassing profit expectations but falling short of revenue estimates. The retailer attributed the revenue miss to consumers deferring home projects amidst soaring interest rates.
On Thursday, Walmart emerged as a standout performer in the inflated environment, outshining predictions on both earnings and revenues. The retail giant continued to allure more affluent shoppers, who are gravitating towards cost-effective options. However, the spotlight dimmed on Under Armour, with the company reporting a 10% drop in North American sales, foreshadowing further challenges. Their strategic board changes and forthcoming job cuts added to the somber outlook.
With almost 93% of S&P 500 companies having divulged their Q1 2024 results, earnings per share growth has solidified at 5.7%, marking the highest surge in almost two years.
Into the Spotlight: Retail and Tech Futures
While the peak of earnings season has passed, the upcoming days promise a spectacle of notable names. Nvidia, the final member of the “Fab 4” alongside Apple, Amazon, and Meta Platforms, is set to disclose its Q1 figures, eagerly anticipated for groundbreaking developments.
Amidst escalating AI fervor, recent advancements by OpenAI and Alphabet have set a high bar. Investors anticipate Nvidia to follow suit with riveting updates. Analysts, as per FactSet polls, project a staggering 412% year-on-year earnings surge and a formidable 241% revenue escalation.
Additionally, this week showcases a cluster of other retailers reporting, including Lowe’s, Macy’s Inc, TJX Companies, Target, and Ross Stores.
Unveiling Impending Surprises in the Earnings Circus
Research underscores a correlation between a company’s earnings date and the nature of their report. Delays in announcing earnings often hint at negative revelations, while early disclosures imply positive outcomes.
Amongst the remaining Q1 2024 reports, Kohl’s Corporation and Bath & Body Works standout for their unconventional timing. Kohl’s, echoing the struggles of department stores, expects a sharp 62% EPS decline, alongside stagnant revenues year-on-year.
Conversely, Bath & Body Works anticipates flat earnings and a modest 2% revenue decrease for Q1, following a string of satisfactory quarters.
Wrapping Up Q1 Earnings Wave
As earnings season draws to a close, a total of 867 companies are poised to deliver their verdict for the period. Over 83% of entities have disclosed their performance, offering a comprehensive insight into the global financial landscape.