Home Depot, one of the key names in the S & P 500, is set to report its earnings before the bell on Tuesday. In the last quarter, Home Depot exceeded expectations despite consumers engaging in smaller home improvement projects. However, this quarter, the home improvement giant is forecasted to have experienced a more than 5% decline in earnings from the previous year. With Home Depot’s shares struggling to make significant gains this year, analysts are eager to see if the upcoming numbers can help the stock recover from its stagnant position.
Analysts from Wells Fargo have highlighted that Home Depot is facing challenges such as a rate overhang, a potentially dilutive deal, and ongoing negative comp trends. Despite these obstacles, there is hope that the first quarter results could provide some relief as there are signs of gradually improving comps. Historical data shows that Home Depot has beaten earnings estimates 87% of the time, indicating a strong track record in terms of financial performance.
Cisco Systems’ Market Position
Cisco Systems is scheduled to report earnings after the close on Wednesday. In the previous quarter, Cisco outperformed expectations and announced a plan to lay off 5% of its workforce. However, analysts are anticipating double-digit declines in both earnings and revenue for the legacy tech giant in this quarter. Cisco’s shares have dropped by about 5% year to date, prompting some analysts to consider the stock as “inexpensive” in the short term.
According to JPMorgan, the medium-to-long term earnings outlook for Cisco may be muted, which could be reflected in the upcoming financial report. One of the reasons for this outlook is the significant surge in demand for Campus Networking products post the pandemic, leading to a correction in the market. Despite this, historical data shows that Cisco shares have risen after the last six earnings releases, suggesting potential resilience in the face of market challenges.
Walmart’s Growth Trajectory
Walmart, another retail giant in the S & P 500, is expected to report its earnings in the premarket on Thursday. In the previous quarter, Walmart exceeded analysts’ estimates, largely driven by the increase in e-commerce sales. For this quarter, analysts are projecting mid-single digits growth in both earnings and revenue for the retail giant. The strong momentum that Walmart has been experiencing is anticipated to continue in the fiscal first quarter, according to insights from Bank of America.
Bank of America analyst Robert Ohmes predicts continued gross margin expansion for Walmart, supported by higher-margin profit streams such as digital advertising, 3P marketplace, and fulfillment services. Despite ongoing challenges in general merchandise sales compared to grocery and health/wellness products, Walmart’s ability to leverage these profit streams might help offset the impact of these challenges. While Walmart has a track record of beating bottom-line forecasts 71% of the time, recent data shows that shares fell in two of the last three earnings days.
The upcoming earnings reports from Home Depot, Cisco Systems, and Walmart are anticipated to provide valuable insights into the current state of the consumer market. Analysts will be closely monitoring these reports to gauge the financial health of these key players and to assess their future growth trajectories in the ever-evolving market landscape.
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