With “Black Friday” and the start of the holiday shopping season kicking off this weekend, the performance of retailers will be a focus for the markets. As of today, what are the expectations for earnings growth for S&P 500 retailers? Which retail sub-industries and companies in the index are projected to report the highest earnings growth for the fourth quarter?
Overall, the Retailing Industry Group and Food & Staples Retailing Industry Group combined are projected to report earnings growth of 15.0% for the fourth quarter.
At the sub-industry level, 10 of the 13 retail sub-industries within these two retail industry groups are expected toreport earnings growth for the fourth quarter.Of these 10 sub-industries, six are projected to report double-digit earnings growth, led by the Internet & Direct Marketing Retail sub-industry. This sub-industry is expected to report earnings growth of 69.4%. Within this sub-industry, Amazon.com ($5.51 vs. $2.16) is expected to report the highest earnings growth and is expected to be the largest contributor to earnings growth for this sub-industry.
In fact, Amazon.com is expected to report the highest earnings growth and is expected to be the largest contributor to earnings growth for the Retailing Industry Group and Food & Staples Retailing Industry Group combined. If Amazon.com were excluded, the estimated earnings growth for Q4 for these two retail industry groups would fall to 6.8% from 15.0. Thus, Amazon.com alone accounts for more than half of the projected earnings growth for all S&P 500 retailers for the fourth quarter.
It is interesting to note that the analysts have cut EPS estimates for Amazon.com since the start of the fourth quarter, as the mean EPS estimate for the company has fallen by 7.7% (to $5.51 from $5.97 since September 30. Over this same period, the stock price for Amazon.com has declined by 24% (to $1515.58 from $2003).
John’s weekly research report, Earnings Insight provides analysis and commentary on trends in corporate earnings data for the S&P 500, including revisions to estimates, year-over-year growth, performance relative to expectations, and valuations. He is a widely used source for the media and has appeared on CNBC, Fox Business News, and the Business News Network. In addition, he has been cited by numerous print and online publications such as The Wall Street Journal, Financial Times, The New York Times, MarketWatch, and Yahoo! Finance.