Welcome!

News Feed Item

The Zacks Analyst Blog Highlights: Macy's, Wal-Mart, Amazon, Best Buy and Target

CHICAGO, Aug. 18, 2014 /PRNewswire/ -- Zacks.com 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 the Macy's (NYSE:M-Free Report), Wal-Mart (NYSE:WMT-Free Report), Amazon (Nasdaq:AMZN-Free Report), Best Buy (NYSE:BBY-Free Report) and Target (NYSE:TGT-Free Report).

Zacks Investment Research, Inc., www.zacks.com

Today, Zacks is promoting its ''Buy'' stock recommendations. Get #1Stock of the Day pick for free.

Here are highlights from Friday's Analyst Blog:

Why Retail Sector Woes Continue

Among the sectors within the S&P 500, Retail may wind up underperforming worst this quarter. True, there are many retailers still yet to report earnings (though we do have roughly three-quarters of the entire sector's total market cap within the S&P in the books at this time), but we've seen enough from the sector thus far to understand what's happening in the space.

Whereas in the previous quarter it was simply enough to blame bad "big-box" retail sales on foul winter weather, in Q2 that's now a full season ago, and still we're seeing disappointing results from some of the biggest names in the sector. Here's what Zacks Director of Research Sheraz Mian had to say about this in his most recent Earnings Trends piece:

"Expectations were low to begin with and came down some more as the quarter unfolded. But retailers have been struggling thus far in Q2 to meet even these lowered estimates, with the EPS beat ratios for the sector the lowest in the S&P 500 index at this stage."

What's more: retailers have been consistently guiding lower for Q3, regardless how well they performed in Q2 (or the company's June/July quarter, whichever it may be). Macy's (NYSE:M-Free Report) recently reported earnings that showed the "best-in-class" retailer missing expectations on the bottom line. Wal-Mart (NYSE:WMT-Free Report) beat its consensus earnings estimate. Both lowered guidance for Q3, and their stocks have taken a hit as a result.

With an overall relatively strong Q2 earnings season across most spaces in the S&P 500, what is it that's sandbagging the retailers right now and for the near future? The reasons are twofold, and I'd make the argument both are being caused, at least in part, by just one company: Amazon (Nasdaq:AMZN-Free Report).

Promotional Environment

Retail has existed within a highly promotional environment for quite some time now: from consumers tenderly finding their way back from the economic recession to holiday and back-to-school seasons to "show-rooming" at a retailer with your smartphone, there always appears to be a way to find what you are looking for at a cheaper price. This has, of course, kept prices and thus margins down, with a continued negative trajectory going forward.

Retailers have trained consumers to expect — and wait for — special discounts and other deals on their merchandise. And then being able to comparison-shop as a consumer for even better deals than the promotions offer is helping spiral pressure against costs for retail goods coming up.

Besides which, growth in U.S. household income hasn't kept pace with many costs of goods, including raw materials used in making all sorts of retail products. This keeps the consumer selective about not only how much he or she is willing to pay for something, but whether or not buying that thing at all is even being considered.

Finally, one can clearly see Amazon.com's hand in manipulating price points and hiving off market share from the big-box players with promotions of its own. Plus, Amazon Prime's free shipping and next-day delivery are closing the gap of the satisfying experience one gets at a big-box retail store. And one less trip to the mall is becoming increasingly attractive to many consumers, especially at these completely competitive price points.

Shift to Online

Amazon's presence in the general retail market to the extent that it is also draws in the eCommerce aspect of the Retail space. Wal-Mart and Macy's still sell a small percentage of their merchandise online — though that number is growing, and not just the big-box companies but specialty retailers everywhere — and migrating investment and energy into the eCommerce space can literally be a dislocating experience for a company accustomed to simply finding plenty of suburban square footage and filling their shops with inventory.

Big-box retail in general may have seen its heyday already, in any case. Where it was once the model for successful retail investment, it has been dislodged by online shopping as well as the "neighborhood convenience" model consumers who do still give considerable foot-traffic are starting to prefer. And while big-box players like Best Buy (NYSE:BBY-Free Report) and Target (NYSE:TGT-Free Report) are taking steps toward the emerging realities in the world of retail, there's always plenty of slack and lack of momentum within even well-conducted plans of action.

Macy's (Zacks Rank #3 [Hold]) is still up over 7 1/2% year-to-date, but it's down 4.7% since its quarterly earnings miss and lowered guidance. Wal-Mart (Zacks Rank #3) is down 6.3% since the start of 2014, and Best Buy (Zacks Rank #3) has yet to recover from its precipitous fall back in January of this year. Target's (Zacks Rank #5 [Strong Sell]) struggles continue, down another 1% today. And Amazon's (Zacks Rank #4 [Sell]) sell-off in the last week of July has proven tough to bounce back from.

Thus, as the retail sector lags behind the rest of the sectors of the S&P 500 on the quarterly earnings reports schedule, so does it lag the overall index in performance, even with an economy showing signs of growth — even robust growth in several areas. Finding ways to offset the downward pricing spiral while navigating toward the successful modern shopping experience will be two keys for these retailers to finally see some bounce-back in their share prices.

Today, Zacks is promoting its ''Buy'' stock recommendations. Get #1Stock of the Day pick for free.

About Zacks Equity Research

Zacks Equity Research provides the best of quantitative and qualitative analysis to help investors know what stocks to buy and which to sell for the long-term.

Continuous coverage is provided for a universe of 1,150 publicly traded stocks. Our analysts are organized by industry which gives them keen insights to developments that affect company profits and stock performance. Recommendations and target prices are six-month time horizons.

Zacks "Profit from the Pros" e-mail newsletter provides highlights of the latest analysis from Zacks Equity Research. Subscribe to this free newsletter today.

About Zacks

Zacks.com is a property of Zacks Investment Research, Inc., which was formed in 1978. The later formation of the Zacks Rank, a proprietary stock picking system; continues to outperform the market by nearly a 3 to 1 margin. The best way to unlock the profitable stock recommendations and market insights of Zacks Investment Research is through our free daily email newsletter; Profit from the Pros.  In short, it's your steady flow of Profitable ideas GUARANTEED to be worth your time! Register for your free subscription to Profit from the Pros.

Get the full Report on M - FREE

Get the full Report on WMT - FREE

Get the full Report on AMZN - FREE

Get the full Report on BBY - FREE

Get the full Report on TGT - FREE

Follow us on Twitter: http://twitter.com/zacksresearch

Join us on Facebook: http://www.facebook.com/home.php#/pages/Zacks-Investment-Research/57553657748?ref=ts

Zacks Investment Research is under common control with affiliated entities (including a broker-dealer and an investment adviser), which may engage in transactions involving the foregoing securities for the clients of such affiliates.

Media Contact

Zacks Investment Research

800-767-3771 ext. 9339

[email protected]

http://www.zacks.com

Past performance is no guarantee of future results. Inherent in any investment is the potential for loss. This material is being provided for informational purposes only and nothing herein constitutes investment, legal, accounting or tax advice, or a recommendation to buy, sell or hold a security. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. It should not be assumed that any investments in securities, companies, sectors or markets identified and described were or will be profitable. All information is current as of the date of herein and is subject to change without notice. Any views or opinions expressed may not reflect those of the firm as a whole. Zacks Investment Research does not engage in investment banking, market making or asset management activities of any securities. These returns are from hypothetical portfolios consisting of stocks with Zacks Rank = 1 that were rebalanced monthly with zero transaction costs. These are not the returns of actual portfolios of stocks. The S&P 500 is an unmanaged index. Visit http://www.zacks.com/performance for information about the performance numbers displayed in this press release.

Logo - http://photos.prnewswire.com/prnh/20101027/ZIRLOGO

SOURCE Zacks Investment Research, Inc.

More Stories By PR Newswire

Copyright © 2007 PR Newswire. All rights reserved. Republication or redistribution of PRNewswire content is expressly prohibited without the prior written consent of PRNewswire. PRNewswire shall not be liable for any errors or delays in the content, or for any actions taken in reliance thereon.

Latest Stories
SYS-CON Events announced today the Kubernetes and Google Container Engine Workshop, being held November 3, 2016, in conjunction with @DevOpsSummit at 19th Cloud Expo at the Santa Clara Convention Center in Santa Clara, CA. This workshop led by Sebastian Scheele introduces participants to Kubernetes and Google Container Engine (GKE). Through a combination of instructor-led presentations, demonstrations, and hands-on labs, students learn the key concepts and practices for deploying and maintainin...
Cognitive Computing is becoming the foundation for a new generation of solutions that have the potential to transform business. Unlike traditional approaches to building solutions, a cognitive computing approach allows the data to help determine the way applications are designed. This contrasts with conventional software development that begins with defining logic based on the current way a business operates. In her session at 18th Cloud Expo, Judith S. Hurwitz, President and CEO of Hurwitz & ...
SYS-CON Events announced today that Tintri Inc., a leading producer of VM-aware storage (VAS) for virtualization and cloud environments, will exhibit at the 19th International Cloud Expo, which will take place on November 1–3, 2016, at the Santa Clara Convention Center in Santa Clara, CA. Tintri VM-aware storage is the simplest for virtualized applications and cloud. Organizations including GE, Toyota, United Healthcare, NASA and 6 of the Fortune 15 have said “No to LUNs.” With Tintri they mana...
In his keynote at 18th Cloud Expo, Andrew Keys, Co-Founder of ConsenSys Enterprise, provided an overview of the evolution of the Internet and the Database and the future of their combination – the Blockchain. Andrew Keys is Co-Founder of ConsenSys Enterprise. He comes to ConsenSys Enterprise with capital markets, technology and entrepreneurial experience. Previously, he worked for UBS investment bank in equities analysis. Later, he was responsible for the creation and distribution of life sett...
Fifty billion connected devices and still no winning protocols standards. HTTP, WebSockets, MQTT, and CoAP seem to be leading in the IoT protocol race at the moment but many more protocols are getting introduced on a regular basis. Each protocol has its pros and cons depending on the nature of the communications. Does there really need to be only one protocol to rule them all? Of course not. In his session at @ThingsExpo, Chris Matthieu, co-founder and CTO of Octoblu, walk you through how Oct...
Fact is, enterprises have significant legacy voice infrastructure that’s costly to replace with pure IP solutions. How can we bring this analog infrastructure into our shiny new cloud applications? There are proven methods to bind both legacy voice applications and traditional PSTN audio into cloud-based applications and services at a carrier scale. Some of the most successful implementations leverage WebRTC, WebSockets, SIP and other open source technologies. In his session at @ThingsExpo, Da...
SYS-CON Events announced today that ReadyTalk, a leading provider of online conferencing and webinar services, has been named Vendor Presentation Sponsor at the 19th International Cloud Expo, which will take place on November 1–3, 2016, at the Santa Clara Convention Center in Santa Clara, CA. ReadyTalk delivers audio and web conferencing services that inspire collaboration and enable the Future of Work for today’s increasingly digital and mobile workforce. By combining intuitive, innovative tec...
Major trends and emerging technologies – from virtual reality and IoT, to Big Data and algorithms – are helping organizations innovate in the digital era. However, to create real business value, IT must think beyond the ‘what’ of digital transformation to the ‘how’ to harness emerging trends, innovation and disruption. Architecture is the key that underpins and ties all these efforts together. In the digital age, it’s important to invest in architecture, extend the enterprise footprint to the cl...
SYS-CON Events announced today that Secure Channels will exhibit at the 19th International Cloud Expo, which will take place on November 1–3, 2016, at the Santa Clara Convention Center in Santa Clara, CA. The bedrock of Secure Channels Technology is a uniquely modified and enhanced process based on superencipherment. Superencipherment is the process of encrypting an already encrypted message one or more times, either using the same or a different algorithm.
Vidyo, Inc., has joined the Alliance for Open Media. The Alliance for Open Media is a non-profit organization working to define and develop media technologies that address the need for an open standard for video compression and delivery over the web. As a member of the Alliance, Vidyo will collaborate with industry leaders in pursuit of an open and royalty-free AOMedia Video codec, AV1. Vidyo’s contributions to the organization will bring to bear its long history of expertise in codec technolo...
Traditional on-premises data centers have long been the domain of modern data platforms like Apache Hadoop, meaning companies who build their business on public cloud were challenged to run Big Data processing and analytics at scale. But recent advancements in Hadoop performance, security, and most importantly cloud-native integrations, are giving organizations the ability to truly gain value from all their data. In his session at 19th Cloud Expo, David Tishgart, Director of Product Marketing ...
SYS-CON Events announced today that Bsquare has been named “Silver Sponsor” of SYS-CON's @ThingsExpo, which will take place on November 1–3, 2016, at the Santa Clara Convention Center in Santa Clara, CA. For more than two decades, Bsquare has helped its customers extract business value from a broad array of physical assets by making them intelligent, connecting them, and using the data they generate to optimize business processes.
Digitization is driving a fundamental change in society that is transforming the way businesses work with their customers, their supply chains and their people. Digital transformation leverages DevOps best practices, such as Agile Parallel Development, Continuous Delivery and Agile Operations to capitalize on opportunities and create competitive differentiation in the application economy. However, information security has been notably absent from the DevOps movement. Speed doesn’t have to negat...
If you’re responsible for an application that depends on the data or functionality of various IoT endpoints – either sensors or devices – your brand reputation depends on the security, reliability, and compliance of its many integrated parts. If your application fails to deliver the expected business results, your customers and partners won't care if that failure stems from the code you developed or from a component that you integrated. What can you do to ensure that the endpoints work as expect...
The Transparent Cloud-computing Consortium (abbreviation: T-Cloud Consortium) will conduct research activities into changes in the computing model as a result of collaboration between "device" and "cloud" and the creation of new value and markets through organic data processing High speed and high quality networks, and dramatic improvements in computer processing capabilities, have greatly changed the nature of applications and made the storing and processing of data on the network commonplace.