February 19, 2019

U.S. Restaurant and Retail Q4 Earnings Dashboard

by Jharonne Martis.

Earnings

The 4Q 2018 blended earnings growth estimate is 14.7%.

Forty five percent of companies in our Retail/Restaurant Index have reported Q4 2018 EPS. Of the 94 companies in the index that have reported earnings to date for Q4 2018, 65% have reported earnings above analyst expectations, 9% reported earnings in line with analyst expectations and 26% reported earnings below analyst expectations.

Revenue

The 4Q 2018 blended revenue growth estimate is 5.0%.

62% have reported revenue above analyst expectations, and 38% reported revenue below analyst expectations.

Same Store Sales

In the U.S. retail landscape, the strength seen in consumer spending continued into the last retail fiscal quarter of 2018, ending January 31. The Thomson Reuters Same Store Sales Index is now looking at a 3.3% Q4 2018 growth, slightly above the 3.2% SSS result posted in Q4 2017. Retailers will continue to post Q4 earnings in the upcoming weeks. Home Depot and Lowe’s will give us a gauge of the housing industry.

Here are the Same Store Sales and Earnings results for retailers reporting earnings this week:

Exhibit 2: Same Store Sales and Earnings Expectations/results – Q4 2018

E-commerce

The bulk of retailers continue to beat expectations, and post healthy earnings growth. Consumer confidence was high in 2018. Shoppers had more money in their pockets and were feeling great about their economic situation as the employment market thrived. Top retailers that smashed expectations are showing that their strategy investments are paying off, including Walmart. The retailer knocked out another earnings quarter, beat earnings and Same Store Sales estimates. Walmart also reported three straight quarters of +40% e-commerce growth.

Exhibit 3: Walmart E-commerce Sales

We can see from Walmart’s StarMine score models (Exhibit 4) that analysts continue to remain bullish on the retailer’s strategy. According to the Earnings Quality model, earnings are coming from sustainable sources and credit looks healthy.

Exhibit 4: StarMine Scores for Walmart

Source: Refinitiv Eikon

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