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The season of results is well advanced and, to date, she is the best in nine years. Stocks reacted positively to reports, with companies averaging 1.12% after each release. This brings us now to the retailer reports. And when the service economy depends on consumer spending, retailers are a true leading indicator of the economic situation. Over the next few days, we will see the quarterly results of three major retail players in three different sales segments. So let's get ready for the quarterly reports by plunging into the TipRanks database and see what the best analysts are waiting in the print edition …
The largest retailer in the world
Sam Walton's post-war creation – a large discount store offering lower prices thanks to larger volumes and lower margins – has become the largest retailer in the world (over 11,000 stores), the largest private employer in the world (more than 2.3 million employees) and the largest company (turnover exceeding 500 billion dollars).
Walmart Inc. (WMT) showed a nested combination of fundamental strength and grounds for concern. On the flow side, Walmart has spent prolifically in recent years. on the credit side, a large part of the company's expenses were devoted to dividend payments (WMT returns of 2.12%), share buybacks and acquisitions. In 2018, Walmart acquired a 77% controlling interest in the Indian company Flipkart, which gave it both an entry into the vast Indian market and a technological base from which to develop its online retail business. .
Financial blogger Zvi Bar has taken a close look at Walmart's recent performance. He noted the following key markers for judging Walmart's upcoming quarterly publication: First, the company continues to expand its efforts and online retail revenues, competing with Amazon.com Inc. (AMZN); second, Walmart's international operations continue to show strong sales and earnings; and finally, Walmart is well positioned to beat its American competition, especially after Toys' bankruptcy R & # 39; Us.
Bar Wal said of his results: "The market is ready to evaluate retailers in terms of revenue growth and market share, and Walmart is not expected to disappoint, and this relative effect is also expected to continue over the next three years. next quarters likely to outperform in 2019. "
Robert Drbul, Market Analyst at Guggenheim, also outlines the fundamentals that will drive Walmart over the next year. In his stock review, he clearly stated: "We expect the US (physical / digital) to remain strong and achieve another strong fourth quarter operating / operating profit, after a strong performance in the store and in the US. line throughout the decade – 18. In 19, we expect another year of solid results … "Its price target on WMT shares, $ 110, heralds a 12% rise in the stock .
Walmart is currently trading at $ 97 the action. The average price target is $ 108, which implies an increase of 11%, and the consensus of analysts is a moderate purchase. This consensual rating is based on five "buy" reviews and four "holds". Walmart is expected to release its fourth quarter results on Tuesday, Feb. 19, and is expected to be well above expectations.
From the chain of pharmacies to the health care business
CVS Health Corp. (CVS) In November, merger with the health insurer Aetna. It becomes the largest health care company in the United States. In addition to the well-known chain of pharmacies, CVS also operates a chain of MinuteClinics walk-in clinics out of pharmacies, is a prescription service management service and now provides health insurance. The company also announced in November 2018 that after the merger of Aetna, the premises of the CVS pharmacy would be renovated and would now focus on retail health and personal care items.
Like Walmart, CVS is expected to exceed profit forecasts when it publishes its fourth quarter on Feb. 20. The company has exceeded expectations in the past two quarters by an average of 3%, and its stock has consistently outperformed its competitors (Walgreens Boots Alliance Inc. and Rite Aid Corp.) over the last five years.
Financial blogger Dividend Sensei summed up the positive outlook for CVS: "Not only does CVS have a dominant market share in all of its core businesses, but by 2019, it should have no difficulty in increasing its bottom line and bottom line. net results, regularly over the years ".
For a more formal perspective of Wall Street, we can turn to Steven Halper of Cantor Fitzgerald. In his recent review of CVS shares, he said, "We value the shares of CVS Health Corp. (CVS) in overweight, the company has one of the largest PBMs in the United States and is the largest in the world. a nationally recognized retail brand.We believe that the acquisition of Aetna adds value., because the addition of clinical expertise and Aetna capabilities should allow the merged company to transform MinuteClinic into a "health care hub" and reduce the cost of care by transferring patients to less expensive environments belonging to CVS We believe the risk / reward trade-off is compelling current levels . "
In accordance with this opinion, Halper gives CVS a price target of $ 96 and a potential upside of 42%. It's an aggressive move, which suggests a lot more potential than the set.
On average, CVS has a price target of $ 90, which represents a 33% increase over the current stock price of $ 67. The consensus of analysts on moderate buying is based on 11 "buy" and four "hold" ratings.
Can you build it?
The housing sector has recently struggled, but Home Depot Inc. (HD), a reputable home improvement and DIY provider, has shown some market resistance in recent months. It outperformed when major indexes fell by the end of 2018..
This is a good basis for the next financial report on the first quarter results. According to Oppenheimer 's Brian Nagel, investors can expect HD to post $ 2.19 EPS for the quarter, and can expect an annual profit of $ 10.32. Continuing the same trends as Walmart and CVS, The Home Depot has exceeded expectations in the last two quarters by 10.5% and 7.4%, respectively. With the stock's rise in recent weeks, market analysts have an optimistic view of the company.
Budd Bugatch of Raymond James highlighted the key factors driving HD's success over the last quarter. First, he noted that "some of the most important parameters for the residential construction sector remain encouraging, including the aging housing stock, housing price appreciation, and GDP growth". And second, he drew attention to the company's online efforts: "A better connection of stores to digital commerce has resulted in faster traffic, sales, and conversion." Bugatch sees HD rising in the near future and gives the stock price a target price of 205 USD. This suggests an increase of 9%.
The optimistic outlook and the solid commercial foundation are the reason for the latest move by HD stock analysts, from Robin Diedrich to Edward Jones. She improved her view on Home Depot, moving it for that he's buying.
According to a consensus, Home Depot is getting a good buy from market analysts, based on six "buy" and two "hold" valuations. HD stocks are currently trading at $ 187 and the average price target of $ 199 has a modest upside potential of 6%. But from the analysts' point of view, this can be underestimated.
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