For immediate publication
Chicago, IL – November 5, 2020 – Zacks.com announces the list of stocks featured on the Analyst Blog. Every day, the analysts at Zacks Equity Research discuss the latest news and events that affect stocks and the financial markets. Stocks recently featured on the blog include: Chuy’s Holdings, Inc. CHUY, Lowes Companies, Inc. LOW, Target Corporation TGT, Beacon Roofing Supply, Inc. BECN, and Best Buy Co., Inc. BBY.
Here are the highlights from Wednesday’s analyst blog:
Retailers will be stocking up on earnings this month
We are in the middle of Q3 2020 earnings season and the overall results so far are better than expected. Market participants are watching the results closely as the quarter was mixed in terms of both economic data and stock market performance.
Meanwhile, six retailers with a cheap Zacks ranking will publish their results this month. Investing in these stocks should be prudent at this point.
Retail sector in the third quarter
Retail growth was slow in the third quarter. Retail sales rose 0.9%, 0.6% and 1.9%, respectively, in July, August and September. Core retail sales (excluding volatile auto sales) increased 1.3%, 0.5% and 1.6%, respectively, over the three months. In particular, core retail sales make up a significant portion of the consumer spending component of US GDP.
The coronavirus resurgence in the US weighed heavily on retail sales. In addition, the inability of the US Congress to reach an agreement on the size and scope of a new fiscal stimulus was a major cause of the tepid growth rate. The most important point, however, is that retail sales have grown despite the lack of a new incentive moat. In absolute terms, retail sales have now reached pre-pandemic levels.
Third quarter results in brief
The third quarter earnings season has started on a positive note, although overall results are likely to remain negative. As of October 30th, S&P 500 total earnings are expected to decline 10.5% with 2.8% lower sales. That would be an improvement over a 22% year-over-year profit decline with 2.9% lower sales as forecast before the reporting cycle.
The story goes on
This also implies a significant improvement compared to the second quarter result, which had fallen by 32.3% with 9.2% lower sales. In particular, earnings for companies in the S&P 500 Index fell 13.5% in the first quarter as sales rose 1.4%. More importantly, earnings expectations for the fourth quarter have been improving gradually since July.
Our top picks
We’ve narrowed our search to six retail stocks for earnings due to be released this month. Each of these stocks has a Zacks Rank 2 (Buy) and a positive ESP result. You can see The full list of today’s Zacks # 1 Rank (Strong Buy) stocks can be found here.
Our research shows that stocks with a combination of a Zacks Rank 3 (Hold) or better and a positive ESP result have a 70% chance of winning. These stocks are expected to appreciate in value following earnings releases. Our ESP filter on profits can help you identify the best stocks to buy or sell before they are reported.
The following graphic shows the price development of our five picks in the third quarter.
Chuy’s Holdings owns and operates full-service restaurants serving specialty menus of authentic Mexican cuisine in Texas and 19 states in the Southeast and Midwest. The company has an ESP profit of + 35.62%.
The Zacks consensus estimate for the current year has improved 5% in the past 7 days. The profit surprise after four quarters averages 87.3%. The company will release the results on November 5th after the closing bell.
Lowe’s company is one of the world’s leading home improvement retailers, providing services to homeowners, tenants and commercial customers. The company has an ESP profit of + 2.90% for the third quarter of fiscal 2020 (end of October 2020).
Lowe’s Companies expects an expected profit growth rate of 48.8% for the current year (end of January 2021). The Zacks consensus estimate for the current year’s earnings has improved 0.4% over the past 30 days. The profit surprise after four quarters averages 17.2%. The company will release its earnings report on November 18 before the opening bell.
target operates as a general merchandise retailer in the United States. It offers beauty and household items, food assortments including perishable goods, dry foods, dairy products and frozen products. and apparel, accessories, home accessories, electronics, toys, seasonal offerings and other merchandise. The company has an ESP profit of + 11.29% for the third quarter of fiscal 2020 (end of October 2020).
The goal is an expected profit growth rate of 12.6% for the current year (end of January 2021). The Zacks consensus estimate for the current year’s earnings has improved 0.4% over the past 30 days. The earnings surprise after four quarters averages 37.6%. The company will release its earnings report on November 18 before the opening bell.
Beacon Roofing Supply sells roofing materials for residential and commercial buildings and other complementary building materials to contractors, builders, retailers and building materials suppliers. The company has an ESP profit of + 3.25%.
The Zacks consensus estimate for the current year has improved 1% in the past 30 days. The profit surprise after four quarters averages 3.9%. The company will release its results on November 19th after the closing bell.
Best buy operates as a retailer of technology products, services, and solutions in the United States, Canada, and Mexico. The company operates in two segments: domestic and international. The company has an ESP profit of + 14.92% for the third quarter of fiscal 2020 (end of October 2020).
Best Buy has an expected earnings growth rate of 18% for the current year (end of January 2021). The Zacks consensus estimate for the current year’s result has improved by 0.6% in the last 30 days. The profit surprise after four quarters averages 33.5%. The company will release its earnings report on November 24th before the opening bell.
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Target Corporation (TGT): Free Stock Analysis Report
Best Buy Co., Inc. (BBY): Free Stock Analysis Report
Lowes Companies, Inc. (LOW): Free Stock Analysis Report
Beacon Roofing Supply, Inc. (BECN): Free Inventory Analysis Report
Chuys Holdings, Inc. (CHUY): Free Stock Research Report
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