The pandemic has shifted the way most consumers approach shopping. Online shopping has been the go-to method over the course of this year for most folks, with e-commerce increasing 18%. For the first time ever, more than a quarter of holiday sales will occur online, leading to an additional $40 billion in online holiday revenue. (I talked more about this and four other trends I am currently monitoring for 2021 in the Growth Investor December Monthly Issue. You can get all the details here.)
With that in mind, let’s take a closer look at four major retailers – Walmart, Inc. (WMT), Lowe’s Companies, Inc. (LOW), Target Corporation (TGT) and The Home Depot, Inc. (HD). The companies released their quarterly results this week and, so let’s see how well they were able to roll with the pandemic’s punches this year.
Walmart, Inc. (WMT)
Walmart’s drive-up online grocery option assisted in their 79% online sales boost for the third quarter. In the third quarter, WMT achieved revenue of $134.7 billion, or a 5.2% year-over-year increase. Third-quarter adjusted earnings rose 15.5% year-over-year to $1.34 per share, up from $1.16 per share in the same quarter a year ago. The analyst community was expecting earnings of $1.18 per share on revenue of $132.42 billion, so WMT posted a 15.5% earnings surprise and a 1.7% revenue surprise.
Lowe’s Companies, Inc. (LOW)
Lowe’s has struggled to keep up with competitors during the pandemic. A lag in updates to their supply chain and online business as well as higher labor costs led to a slight miss for the third quarter.
As a result, shares of Lowe’s fell on Wednesday morning after the home improvement retailer missed analysts’ earnings projections for the third quarter. Comparable sales increased 30%, while comparable sales in the U.S. rose 32.4%. Total third-quarter sales jumped 28.2% year-over-year to $22.31 billion, exceeding analysts’ forecasts for $21.25 billion.
Lowe’s also reported that third-quarter earnings climbed 40.4% year-over-year to $1.98 per share from $1.04 per share, in the third quarter of 2019. However, the analyst community was expecting earnings of $1.99 per share, so LOW posted a 1.5% earnings miss.
Target Corporation (TGT)
During the third quarter, online and in-store sales rose 20.7%, digital sales surged 155% and same-store sales rose 9.9%. Target noted that its curbside pickup offering was widely popular, growing more than 500%. And its home delivery service, Shipt, surged almost 280%. Target now has a $6 billion market share—and $1 billion of that came in the third quarter.
Overall, Target achieved adjusted earnings of $2.79 per share and revenue of $22.63 billion in the third quarter. That represented 21% year-over-year revenue growth and 105% year-over-year earnings growth. The analyst community was expecting earnings of $1.60 per share and revenue of $20.93 billion, so Target crushed earnings estimates by 74.4% and revenue forecasts by 8.1%.
The Home Depot, Inc (HD)
Thanks to “exceptional” third-quarter results, including 24.1% same-store sales growth, The Home Depot, Inc. announced on Tuesday morning that it was dedicating $1.0 billion to provide raises to its employees. The majority of Home Depot’s employees are expected to see an increase in their paychecks to help offset the challenges many experienced amidst the global pandemic.
For the third quarter, The Home Depot reported earnings of $3.4 billion, or $3.18 per share, on $33.5 billion in sales. That represents 21.4% year-over-year earnings growth and 23.2% year-over-year sales growth. The analyst community was expecting earnings of $3.05 per share and sales of $32.04 billion, so the Home Depot posted a 4.3% earnings surprise and a 4.6% sales surprise.
The Home Depot also reported earnings of $3.4 billion, or $3.18 per share, on $33.5 billion in sales. The analyst community was expecting earnings of $3.05 per share and sales of $32.04 billion, so The Home Depot posted a 4.3% earnings surprise and a 4.6% sales surprise. About 50% of HD’s online sales are picked up at the store.
Clearly, most of these large retailers have been able to adapt under strenuous conditions of the pandemic. It helps that most consumers are also willing to adapt to online shopping; in fact, online shopping was able to offset the 3.2% decline in brick-and-mortar spending this year.
To learn more about the retail trend and which retail stocks I recommend, I encourage you to join Growth Investor today. In yesterday’s December’s Monthly Issue, I recommended three new buys – two High-Growth companies and one Elite Dividend Payer stock. Each stock is a strong buy right now and perfectly positioned for big profits in the current and post-pandemic world. If you want to get in while these stocks are still under my buy limits, now is the time to sign up.
P.S. Over the longer term, I think stocks are set to go much higher. Actually, I’m predicting the Dow will hit 200,000 in the coming years.
Now, that might sound crazy, but history proves otherwise.
During the ‘80s, the Dow went on a 234% tear and by the end of the decade, analysts and the media were calling for an end to the good times and a market crash in the early ‘90s, much like some naysayers are doing today. Instead, the Dow surged almost twice as high in the 90s as it did in the ‘80s.
My special Financial Foreshock Summit has all the details on the factors I believe will drive stocks higher. (You can watch my free briefing here.) I also share where I see the best opportunity to play the growth.
Note: The Editor hereby discloses that as of the date of this email, the Editor, directly or indirectly, owns the following securities that are the subject of the commentary, analysis, opinions, advice, or recommendations in, or which are otherwise mentioned in, the essay set forth below:
Lowe’s Companies, Inc. (LOW)