Zacks Earnings Trends Highlights: Target, Walmart and TJX

For Immediate ReleaseChicago, IL – May 22, 2025– Zacks Director of Research Sheraz Mian says, "Total earnings for Retail sector companies already reported are up +11.5% from the same period last year on +5% higher revenues, with 56% beating EPS estimates and 52% beating revenue estimates"A Closer Look at Retail EarningsNote: The following is an excerpt from this week's Earnings Trends report. You can access the full report that contains detailed historical actual and estimates for the current and following periods, please click here>>>Here are the key points:Total Q1 earnings for the 469 S&P 500 members that have reported results are up +11.5% from the same period last year on +4.3% higher revenues, with 74.2% beating EPS estimates and 62.5% beating revenue estimates.Companies struggled to beat consensus estimates this reporting cycle, with the Q1 EPS and revenue beats percentages for this group of 469 index members tracking below what we had seen from the group in other recent periods, as well as the average for this group over the preceding 20-quarter period.For the Retail sector, we now have Q1 results from 96% of the sector's members in the S&P 500 index. Total earnings for these Retail sector companies are up +11.5% from the same period last year on +5% higher revenues, with 56% beating EPS estimates and 52% beating revenue estimates.The +11.5% earnings growth pace for these Retail sector companies drops to a decline of -5.2% once Amazon's substantial contribution is excluded. The EPS and revenue beats percentages for the group are materially below historical averages for this same group of Retail sector companies.Retail Sector Earnings – Walmart vs. TargetThe earnings focus lately has been on the Retail sector, withTarget TGT becoming the latest big-box retailer to come out with results, which follows results from Walmart WMT, TJX Companies TJX and others.Target found a way to come up short of even the materially lowered estimates, which has become almost a recurring theme for them in the post-COVID period. They have been steadily losing ground, with Walmart and Amazon making inroads into its market share.Walmart, on the other hand, can't seem to do anything wrong, with its growing digital business not only providing an efficient channel to monetize its essentials-centric merchandise and attract an ever-growing share of the high-income households but also opening up growth opportunities in high-margin activities like advertising, third-party marketplace, and even data.Part of Target's problems is a result of consumer spending trends that have shifted away from the company's discretionary merchandise. It has an essentials business like groceries as well, but that business is far smaller than Walmart's. While roughly 60% of Walmart's revenues comes from its essentials merchandise, the ratio for Target is roughly 20%.While there is no question that the operating environment for vendors of discretionary-type merchandise remains difficult, Target's persistent run of weak quarterly results likely also reflects company-specific execution issues. After all, rivals like TJX are doing a lot better with comparable merchandise, and even Walmart is able to show better results in its general merchandise business than Target.Evolving Expectations for 2024 Q2 and BeyondThe start of Q2 coincided with heightened tariff uncertainty following the punitive April 2nd tariff announcements. While the onset of the announced levies was eventually delayed for three months, the issue has understandably weighed heavily on estimates for the current and coming quarters.The expectation at present is for Q2 earnings for the S&P 500 index to increase by +5.5% from the same period last year on +3.8% higher revenues.While it is not unusual for estimates to be adjusted lower, the magnitude and breadth of Q2 estimate cuts are greater than we have seen in the comparable periods of other recent quarters.Since the start of the quarter, estimates have come down for 15 of the 16 Zacks sectors, with the biggest declines for the Transportation, Autos, Energy, Construction, and Basic Materials sectors. The only sector experiencing favorable revisions in this period is Aerospace.Estimates for the two largest earnings contributors to the index – Tech & Finance – have also declined since the quarter began.Tech sector earnings are expected to be up +12.1% in Q2 on +9.8% higher revenues. While these earnings growth expectations are materially below where they stood at the start of April, the revisions trend appears to have notably stabilized lately, as we have been flagging in recent weeks.The Tech sector is much more than just any another sector, as it alone accounts for almost a third of all S&P 500 earnings.The Earnings Big PictureWhile estimates for this year have been under pressure lately, there haven't been a lot of changes to estimates for the next two years at this stage.Stocks have recouped their tariff-centric losses, although the issue has only been deferred for now. While some of the more dire economic projections have eased lately, there is still plenty of macro uncertainty that will likely continue to weigh on earnings estimates in the days ahead, particularly as we get visibility on the tariffs question.Why Haven't You Looked at Zacks' Top Stocks?Since 2000, our top stock-picking strategies have blown away the S&P's +7.7% average gain per year. Amazingly, they soared with average gains of +48.4%, +50.2% and +56.7% per year.Today you can access their live picks without cost or obligation.See Stocks Free >>Follow us on Twitter:  https://twitter.com/zacksresearchJoin us on Facebook:  https://www.facebook.com/ZacksInvestmentResearch/Zacks Investment Research is under common control with affiliated entities (including a broker-dealer and an investment adviser), which may engage in transactions involving the foregoing securities for the clients of such affiliates.Media ContactZacks Investment Research800-767-3771 ext. 9339support@zacks.comhttps://www.zacks.comZacks.com provides investment resources and informs you of these resources, which you may choose to use in making your own investment decisions. Zacks is providing information on this resource to you subject to the Zacks "Terms and Conditions of Service" disclaimer. www.zacks.com/disclaimer.Past performance is no guarantee of future results. Inherent in any investment is the potential for loss.This material is being provided for informational purposes only and nothing herein constitutes investment, legal, accounting or tax advice, or a recommendation to buy, sell or hold a security. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. It should not be assumed that any investments in securities, companies, sectors or markets identified and described were or will be profitable. All information is current as of the date of herein and is subject to change without notice. Any views or opinions expressed may not reflect those of the firm as a whole. Zacks Investment Research does not engage in investment banking, market making or asset management activities of any securities. These returns are from hypothetical portfolios consisting of stocks with Zacks Rank = 1 that were rebalanced monthly with zero transaction costs. These are not the returns of actual portfolios of stocks. The S&P 500 is an unmanaged index. Visit https://www.zacks.com/performancefor information about the performance numbers displayed in this press release.Only $1 to See All Zacks' Buys and SellsWe're not kidding.Several years ago, we shocked our members by offering them 30-day access to all our picks for the total sum of only $1. No obligation to spend another cent.Thousands have taken advantage of this opportunity. Thousands did not - they thought there must be a catch. Yes, we do have a reason. We want you to get acquainted with our portfolio services like Surprise Trader, Stocks Under $10, Technology Innovators,and more, that closed 256 positions with double- and triple-digit gains in 2024 alone.See Stocks Now >>Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Target Corporation (TGT): Free Stock Analysis Report The TJX Companies, Inc. (TJX): Free Stock Analysis Report Walmart Inc. (WMT): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).Zacks Investment ResearchWeiter zum vollständigen Artikel bei Zacks Weiter zum vollständigen Artikel bei Zacks