This week, investors will get a glimpse of the state of consumers this week, and several major retailers should report back. Walmart, Target and Home Depot are among the S&P 500 companies due to release their latest quarterly results. These results come from the fact that fears about the state of the economy affect investor sentiment. The University of Michigan consumer sentiment index for May came in at 57.7, well below expectations as five-year inflation expectations rose to their highest level since June 2008. Against this backdrop, CNBC Pro checked out the S&P 500 to see how retailers reporting this week typically turn a profit. We looked at surprising 10-year median earnings — the percentage by which a company beats estimates — how often they beat analysts’ expectations, and how good each stock is based on those reports. Home Depot has the highest efficiency rate of any company on the list, at 92.5%. The home renovation giant also outperformed earnings expectations by 3.2% over the past 10 years. However, Home Depot stock is typically muted after the company reports earnings. Shares have struggled this year, shedding 8%. Telsey Advisory Group analyst Joseph Feldman noted on Thursday that Home Depot “has not kept up with difficult comparisons over the past three years, helped by rising home-related spending as a result of the pandemic and government stimulus.” He has an excellent stock rating. Home Depot is due to submit a report on Tuesday. Bath & Body Works is also due to report on Thursday. The soap and lotion seller outperforms expected earnings more than 80% of the time, and his stock is up 1.2% on average on earnings days. Bath & Body Works shares are down nearly 22% since the start of the year. “Due to softer discretionary data since March and an uncertain macro backdrop, investor expectations are low for Q1 earnings,” Deutsche Bank analyst Gabriella Carbone wrote on Friday. Ross Stores, which also reported on Thursday, also beat expectations by 82.5%. However, stocks are on average losing 0.21% on a profit day. Ross Stores shares are down almost 10% this year. However, Morgan Stanley analyst Alex Straton is optimistic. ROST YTD Mountain ROST in 2023 “We see ample opportunity for ongoing positive EPS revisions to boost stocks, making it a particularly attractive opportunity in the Off-Price subsector. Given these dynamics, ROST has arguably become our preferred Off-Price. the name appears in the 1Q prints,” wrote Straton. Retail giant Walmart is also expected to release a report next week. The company beat analysts’ expectations 77.5% of the time, and its earnings per share beat estimates by more than 3%. Walmart shares are up nearly 8% this year, slightly outperforming the S&P 500. The company is due to report earnings on Thursday. — Michael Bloom of CNBC provided the coverage.
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