Retail Rules the Day as Markets Look to Snap 4-Day Losing Streak
Although we don't believe in timing the market or panicking over daily movements, we do like to keep an eye on market changes -- just in case they're material to our investing thesis.
After declining for four straight days, and falling nine out of the last 11, the Dow Jones Industrial Average looks poised to post a winning session today. As of 11:45 a.m. EDT, the blue chip index is higher by 39 points, or 0.26%, while the S&P 500 is up 0.47% and the Nasdaq has risen 0.59%. This morning a number of big-name retailers reported earnings, and for the most part results came in better than expected. Let's take a look at a few of the big movers.
Best Buy reported a sharp rise in net income for the second quarter thanks to cost-cutting measures and more Web traffic. Known to some as the "showroom" for Amazon, Best Buy has struggled over the past few years as sales have fallen off the map, but this quarter it really looks like the company may have turned the corner. Results beat Wall Street's expectations and shares were up as much as 16% during early-morning trading. Currently, though, shares are higher by 9.73% after the company posted earnings per share of $0.32, much better than the $0.12 per share posted last year and the $0.12 analysts were expecting. Revenue came in at $9.3 billion, which also beat expectations, which had been set at $9.13 billion, but came in lower than the $9.34 billion Best Buy posted last year during this time. While today may be a great day for Best Buy bulls, investors need to remember this is only one quarter, and it may be wise to wait until a few quarters of better-than-expected results come in before jumping on the Best Buy bandwagon.
Shares of discount retailer TJX , parent to T.J.Maxx, Marshalls, and Home Goods, also posted a strong beat this morning. Earnings per share came in at $0.66, better than the $0.56 the company posted last year and better than the $0.63 per share analysts were expecting. Revenue increased 8% during the quarter over last year, $6.44 billion compared to $5.95 billion, and again topped expectations of $6.37 billion. Additionally, the company increased its full-year earnings-per-share estimates from $2.70-$2.78 to $2.74-$2.80. But currently, the full-year earnings forecast from analysts sits at $2.82, which, if it holds at that level, may cause shares to fall in the future if the company meets its own prediction. TJX's shares are up 5.53% this morning.
Last, shares of Home Depot are trading flat this morning, currently just higher by 0.13% after also reporting results prior to the opening bell today. Earnings per share hit $1.24, better than the $1.21 Wall Street was looking for and an increase of 23% from what the company posted last year during this quarter. Revenue was higher by 9.5% from last year, coming in at $22.5 billion, also beating estimates of $21.8 billion. The company also reported an astonishing 11.4% increase in same-store sales this quarter. Finally, the company raised its full-year guidance for EPS to $3.60, up from $3.52. The recovering housing market is certainly helping Home Depot, but the real test is not far away for the company, as interest rates continue to rise and a possible pullback in the housing market may slow sales.
More Foolish insight
The retail space is in the midst of the biggest paradigm shift since mail order took off at the turn of last century. Only those most forward-looking and capable companies will survive, and they'll handsomely reward those investors who understand the landscape. You can read about the 3 Companies Ready to Rule Retail in The Motley Fool's special report. Uncovering these top picks is free today; just click here to read more.
The article Retail Rules the Day as Markets Look to Snap 4-Day Losing Streak originally appeared on Fool.com.Fool contributor Matt Thalman owns shares of Amazon.com and Home Depot. Check back Monday through Friday as Matt explains what caused the Dow's winners and losers of the day, and every Saturday for a weekly recap. Follow Matt on Twitter @mthalman5513. The Motley Fool recommends Amazon.com and Home Depot. The Motley Fool owns shares of Amazon.com. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.
Copyright © 1995 - 2013 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.