The Zacks Analyst Blog Highlights: Walmart, Target, Lowe's and Amazon

For Immediate Release

Chicago, IL – August 24, 2020 – announces the list of stocks featured in the Analyst Blog. Every day the Zacks Equity Research analysts discuss the latest news and events impacting stocks and the financial markets. Stocks recently featured in the blog include Walmart Inc. WMT, Target Corporation TGT, Lowe’s Companies, Inc. LOW and Amazon AMZN.

Here are highlights from Friday’s Analyst Blog:

Digitization Plays Key Role for WMT, TGT & LOW in Q2 Earnings

Surging digital sales is proving to be a treat for retail sector players, amid the ongoing pandemic. This was best exemplified when some of the big names from the retail industry came out with sparkling e-commerce sales numbers in their recent quarterly reports.

Companies like Walmart Inc.Target Corporation Lowe’s Companies, Inc. scored big on the e-commerce platform when they reported their quarterly outcomes earlier this week. While there have been a number of company specific factors aiding their respective online sales growth, few of the common aspects were better consumer engagement to boost traffic, improved digital interface and prudent assortment placements. The boom witnessed by retailers in the e-commerce realm is helping them make up for some of the lost grounds in traditional stores.

Markedly, brick-and-mortar stores had an important role to play in the digital upsurge. Stores rapidly adapted themselves to fulfill functions such as buy online pick in store, same-day delivery, curbside pickups etc. In fact, physical store networks of these retailers put them in a favorable position to compete with e-commerce giant Amazon.

Industry experts pointed out that some of the extraordinary sales drivers — stock piling, stimulus checks and enhanced unemployment benefits — ushered in some good news for retailers during the quarter. Going ahead, uncertainty surrounding government stimulus and a contentious November election may impact consumer spending activity.

There is no denying the fact that the pandemic has taken e-commerce to a whole new high. Without an effective treatment or a vaccine in the near term, there is little scope that consumers will change the habits picked up in the recent times. This is likely to continue fueling digital sales.

An insight provided by Forbes highlights that U.S. e-commerce sales is expected to reach $709.8 billion in 2020, accounting for almost 14.5% of total U.S. retail sales. The metric indicates a considerable rise from e-commerce sales of $601.7 billion in 2019.

All said, let’s take a look at three retail biggies that delivered spectacular numbers this week buoyed by their strong online presence.

Target Outshines Estimates

Target registered a stellar performance in second-quarter fiscal 2020. Adjusted earnings came in at $3.38 per share, which surpassed the Zacks Consensus Estimate of $1.64 and rose from $1.82 per share reported in the year-ago quarter.

The company generated total revenues of $22,975 million that increased 24.7% from the year-ago quarter’s figure and outpaced the Zacks Consensus Estimate of $20,235.1 million. Notably, comparable sales increased for the 13th consecutive quarter. The metric gained from strength in the digital channel.

Stores fulfilled more than 90% of the company’s sales in the quarter. Same-day services (Order Pick Up, Drive Up and Shipt) surged 273% year over year and accounted for nearly 6 percentage points of total comparable sales growth. Sales fulfilled by Shipt were up more than 350% year over year and sales through Drive-Up were up more than 700% during the quarter under review. In-store pick-up sales rose more than 60%.

The stock, which currently carries a Zacks Rank #2 (Buy), surged 29.6% in the past three months compared with the industry’s growth of 12.3%. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

E-commerce Adds Cheer to Walmart, Q2 Earnings Top

Walmart’s second-quarter fiscal 2021 results reflect consistent rise in demand across categories. Elevated stay-at-home trends continued to boost the company’s e-commerce sales.

The company’s adjusted earnings came in at $1.56 per share, which surpassed the Zacks Consensus Estimate of $1.22. Moreover, earnings grew 22.8% from adjusted earnings per share of $1.27 reported in the year-ago quarter.

Total revenues increased 5.6% to $137.7 billion. On a constant-currency basis, total revenues advanced 7.5% to $140.2 billion. The consensus mark was pegged at $134.9 billion.

For Walmart U.S., both store and online sales remained strong, especially in general merchandise and supported by government stimulus spending. E-commerce sales drove comps by 600 basis points. E-commerce sales soared a whopping 97% with strength across all channels. Weekly average digital customer count as well as repeat rates grew significantly and boosted e-commerce sales. Also, marketplace sales jumped at a triple-digit rate.

This Zacks Rank #3 (Hold) stock gained 5% in the past three months compared with the industry’s rise of 7%.

Lowe's Rise Y/Y, Digitization a Key Catalyst

Lowe’s second-quarter fiscal 2020 results benefitted from prudent retail-fundamental strategy with improved technology and operational channels.

Adjusted earnings of $3.75 per share surpassed the Zacks Consensus Estimate of $3.03 and surged 74.4% year over year. Net sales of $27,302 million rallied 30.1% year over year and surpassed the Zacks Consensus Estimate of $24,708 million. Notably, comparable sales increased 34.2% during the quarter under review.

Sales at increased 135% in fiscal second quarter, as the company’s pro and DIY customers increasingly shopped online. This drove online penetration to 8% of sales. Further, the company is on track with boosting its omni-channel capabilities that includes delivery scheduling, order tracking as well as search and navigation features.

This Zacks Rank #3 (Hold) stock gained 29.7% in the past three months compared with the industry’s growth of 20.9%

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