The week in preview: Earnings from Walmart, Macy's, and other retailers

Consumer spending in the third quarter was reportedly lower, yet the sales reports from retailers weren't all bad. This week will bring more earnings reports from some shopping mall and strip mall favorites.

Of course Wal-Mart Stores Inc. (WMT), the world's largest retailer, is perhaps best positioned to benefit from cash-strapped, bargain-seeking consumers. The three months that ended in October saw Walmart offer mobile phone service, boost its online offerings, and expand overseas. Analysts surveyed by Thomson Reuters expect this Bentonville, Ark.-based company to report earnings of $0.81 per share, compared to $0.77 in the same period of last year. Revenue is expected to total $99.8 billion, or 1.2% higher than a year ago. So far, the full-year forecast is for earnings of $3.58 per share (+4.5%) on $409.9 billion (+1.1%) in revenue. Walmart's earnings have met or beat consensus estimates in the past five quarters. The long-term EPS growth forecast is 12.1%, which is better than the retail industry average, and the earnings multiple of this dividend payer is 13x. The First Call consensus recommendation has been to buy WMT for more than 90 days, and the mean price target is $60.43. Gurufocus likes Walmart for its reliable dividend. At $51.25, shares are down 8.6% year to date.

Expectations are higher for the nation's second-largest auto parts chain. Advance Auto Parts Ltd. (AAP) reached a distribution agreement with Zep Inc. (ZEP) and saw changes in management and to its board in its third quarter. Analysts are looking for Advance to report a profit of $0.67 per share, up 11.9% from the same period a year ago. Sales for the period that ended in September are expected to be 6.3% higher to $1.3 billion. The forecast for the full year is for earnings of $3.05 per share (+9.8%) on $5.4 billion (+5.6%) in revenue. Advance has topped earnings expectations in the past five quarters, by as much as 13 cents per share. The long-term EPS growth forecast is 11.6%, which is also better than the retail industry average. This dividend payer's earnings multiple is 11x, and its net cash flow from operations has increased in recent quarters while long-term debt has decreased. The consensus recommendation remains to buy AAP, with a mean price target of $47.82. Advance recently was initiated with a buy rating by UBS. Shares have fallen 16.1% in the past three months to $38.04, and have been below their 200-day moving average since late September.

Other retailers expected to report modest earnings growth this week include Kohl's Corp. (KSS) and Nordstrom Inc. (JWN).

Analysts are looking for Urban Outfitters Inc. (URBN), the Philadelphia-based retailer of hipster apparel, accessories, and gifts, to report fiscal third quarter earnings of $0.34 per share, down just a penny per share from the same period of the previous year. But sales for the three months that ended in October are expected to be 4.9% higher to $501.3 million. Analysts so far expect to see sequential growth in both EPS and revenue in the fourth quarter. Urban Outfitters has only missed earnings estimates in one of the past five quarters, and that by only three cents per share. Its long-term EPS growth forecast is 20.4%, which is better than that of competitors Abercrombie & Fitch Co. (ANF) and Gap Inc. (GPS). Net cash flow from operations has grown in recent quarters, and the company had reported being free of long-term debt as well. Analysts on average recommend buying URBN, with a mean price target of $35.20. Zacks recently recommended the stock. Shares have risen 23.4% in the past three months and are trading near the 52-week high of $33.99.

Other retailers expected to post lower earnings this week include Abercrombie & Fitch Co. (ANF) and JCPenney Co. Inc. (JCP).

Macy's Inc. (M) is expected to be this week's hard luck story, with analysts forecasting a deeper loss. In its third quarter, the nation's largest department store chain saw lower same-store sales in both August and September, but also declared a quarterly dividend. The Cincinnati-based retailer is expected to report a net loss of $0.10 per share on revenue of $5.2 billion. That compares with a loss of $0.08 per share on $5.5 billion in sales in the same period of last year. For the fourth quarter, which includes the holiday shopping season, analysts so far expect year-over-year earnings growth but a decline in sales. But results have been better than expected in the past five quarters, beating earnings estimates by as much as a dime per share. The earnings multiple is 14x and the long-term EPS growth forecast is 9.5%, which is about the same as that of JCPenney Co. Inc. (JCP). Yet, the consensus recommendation recently shifted to buying the stock, and the mean price target is $20.77. Macy's was upgraded following October sales reports. Shares have pulled back from last month's 52-week high of $20.84 to close Friday at $19.18.

As for other earnings results, Dish Network Corp. (DISH), Green Mountain Coffee Roasters Inc. (GMCR), Priceline.com Inc. (PCLN), Progressive Corp. (PGR), and Ralcorp Holdings Inc. (RAH) are forecast to post earnings growth, while Electronic Arts Inc. (ERTS) and Lions Gate Entertainment Corp. (LGF) are expected to have swung to profits.

Agilent Technologies Inc. (A), Applied Materials Inc. (AMAT), Live Nation Inc. (LYV), Tyco International Ltd. (TCT), and Walt Disney Co. (DIS) are expected to report lower earnings. And losses are expected from Beazer Homes USA Inc. (BZH), Blockbuster Inc. (BBI), Clearwire Corp. (CLWR), and MBIA Inc. (MBI).

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