The week in preview: More retail earnings: Gap, Home Depot, Sears, Target ...


On the heels of last week's better-than-expected earnings results from retailers Abercrombie & Fitch Co. (ANF), Kohl's Corp. (KSS), Macy's Inc. (M), Urban Outfitters Inc. (URBN) and Wal-Mart Stores Inc. (WMT) -- as well as disappointing numbers from Blockbuster Inc. (BBI) and JCPenney Co. Inc. (JCP) -- the coming week will bring results from more shopping- and strip-mall favorites.

TJX Companies Inc. (TJX), which operates T.J. Maxx and Marshalls stores in the U.S., settled a class action, announced share buybacks and raised its guidance in the third quarter. For the three months that ended in October, analysts surveyed by Thomson Reuters expect TJX to report earnings of $0.80 per share, up from $0.57 in the same period of last year. Revenue is expected to total $5.3 billion, or 10.2% higher than a year ago. So far, the full-year forecast is for a profit of $2.59 per share (+22.3%) on $20.0 billion (+5.5%) in sales.

This dividend payer's earnings have met or beat consensus estimates in the past five quarters. The long-term EPS growth forecast is 13.0%, which is better than the sector average, and its earnings multiple is 14x. TJX had more cash on hand than long-term debt at last report, and its net cash flow from operations has grown in recent quarters. The First Call consensus recommendation has been to buy TJX for more than 90 days, and the mean price target is $44.07. Analysts see TJX doing well in the upcoming holiday season. Shares have pulled back from a recent multi-year high of $40.64 and closed Friday at $38.98, which is 10.2% higher than three months ago.

In its third quarter, San Francisco-based purveyor of khaki, The Gap Inc. (GPS), celebrated its 40th anniversary, saw the death of co-founder Don Fisher, and declared a quarterly dividend. Analysts are looking for Gap to report that its profit grew 20.5% from a year ago to $0.44 per share. But sales for the period that ended in October are expected to come to $3.6 billion, about the same as a year ago. The forecast is for modest year-over-year growth in the fourth quarter in both EPS and revenue. Gap has topped earnings expectations by a penny per share in the past five quarters, and the long-term EPS growth forecast is 11.5%, which is better than that of competitor Abercrombie & Fitch Co. Gap's earnings multiple is 14x, and the consensus recommendation remains to buy GPS. One analyst recently downgraded GPS though, citing potential risk. The mean price target is $25.43. Shares closed at $22.42 Friday; they have traded between $21 and $23 since early September.

Analysts are looking for more modest growth from Target Corp. (TGT). For the third quarter in which the Minneapolis-based retailer opened 26 new stores, entered a price war with Walmart and Amazon.com Inc. (AMZN), and declared a quarterly dividend, the consensus forecast is for earnings of $0.50 per share on revenue of $15.3 billion. That compares with $0.49 per share on $15.1 billion in the year-ago period. Analysts so far expect to see stronger year-over-year growth in both EPS and revenue in the fourth quarter. Target has only missed the Street view on earnings in one of the past five quarters, and then only by a penny per share. The long-term EPS growth forecast is 13.7%, which is better than that of Walmart and Sears (see below). Target's earnings multiple is 14x, and its net cash flow from operations has grown in recent quarters. Analysts, on average, recommend buying TGT, with a mean price target is $56.88. Investopedia expects Target's results to be in line with expectations. Shares have retreated from the 52-week high of $51.77 back in October and closed Friday at $48.99.

Other retailers expected to report earnings growth this week include Ann Taylor Stores Corp. (ANN), Buckle Inc. (BKE), Children's Place Retail Stores Inc. (PLCE), Gymboree Corp. (GYMB), Ross Stores Inc. (ROST) and Shoe Carnival Inc. (SCVL), while Kirkland's Inc. (KIRK) is forecast to have swung to a profit.

For Home Depot Inc. (HD), the world's largest home improvement chain, expectations are lower. The Atlanta-based big-box retailer launched its Martha Steward brand and power drill exchange, as well as declared a quarterly dividend, in the third quarter. Earnings are expected to have fallen 20.0% from a year ago to $0.36 per share. And sales for the three months that ended in October are expected to be 8.4% lower to $16.3 billion. The full-year forecast is for net income of $1.52 per share (-14.6%) on $65.3 billion (-8.4%) in sales. But Home Depot has topped earnings estimates in the past five quarters, by as much as 10 cents per share. Its long-term EPS growth forecast is 10.1% and its earnings multiple is 17x, both of which are about the same as those of rival Lowe's Companies Inc. (LOW). But analysts, on average, still recommend buying HD, and the mean price target is $29.89. The Motley Fool called HD as a stock ready to run. At $27.34, shares are a down a bit from three months ago, and they have faced resistance around $28.00 since early August.

Other retailers expected to report lower earnings this week include BJ's Wholesale Club Inc. (BJ), Foot Locker Inc. (FL), Hot Topic Inc. (HOTT) and Zumiez Inc. (ZUMZ).

Sears Holdings Corp. (SHLD) is expected to be this week's hard luck story, with analysts anticipating a deeper loss. In its third quarter, Sears opened in-store toy stores, launched Christmas Club cards, and offered early Black Friday deals ahead of the holiday season, as well as saw a new member on its board. The Hoffman Estates, Ill.-based retailer is expected to report a net loss of $1.09 per share on revenue of $9.9 billion. That compares with a loss of $0.90 per share on $10.7 billion in sales in the same period of last year. For the fourth quarter, analysts expect lower year-over-year earnings and sales. But results have been better than expected in two of the past three quarters, and the long-term EPS growth forecast is 10.0%, which is better than that of JCPenney. Zacks downgraded SHLD due to stiff competition that could undermine its growth prospects. Shares are 4.9% lower than three months ago, when they were trading near the 52-week high of $79.35.

Bon Ton Stores Inc. (BONT), Casual Male Retail Group Inc. (CMRG), Limited Brands Inc. (LTD) and Saks Inc. (SKS) are also expected to report net losses this week.

Visit AOL Money & Finance for more earnings coverage.

Symbol Lookup
IndexesChangePrice
DJIA+5.7512,883.95
NASDAQ+11.782,915.86
S&P 500+2.911,349.96

Last updated: February 08, 2012: 11:27 PM

Hot Stocks

General Electric

19.24+0.06(+0.31)

Alcoa

10.670.00(0.00)

Apple Inc

476.68+7.85(+1.67)

Google Inc 'A'

609.85+3.08(+0.51)

Bank of America

8.13+0.28(+3.57)

Wal-Mart Stores

61.62-0.07(-0.11)

Exxon Mobil Corp

85.32-0.55(-0.64)

Ford

12.84-0.04(-0.31)

Citigroup

34.23+1.16(+3.51)

IBM

192.95+0.35(+0.18)

Yahoo

15.78-0.05(-0.32)

Starbucks

48.72+0.31(+0.64)

Microsoft

30.66+0.31(+1.02)

Home Depot

45.17-0.29(-0.64)

DailyFinance Headlines

Benzinga Headlines

TheFlyOnTheWall.com Headlines

BioHealth Investor Headlines

WalletPop Headlines

DailyFinance BlackBerry App

My Portfolios

Track your stocks here!

Find out why more people track their portfolios on AOL Money & Finance then anywhere else.

BloggingStocks Partners

More from AOL Money & Finance

BioHealth Investor Headlines

Page Loaded in 1328761652191 ms.