Eighty-nine percent of companies in our Retail/Restaurant Index have reported Q4 2021 EPS. Of the 180 companies in the index that have reported earnings to date, 74% have reported earnings above analyst expectations, 3% matched and 23% reported earnings below analyst expectations. The Q4 2021 blended earnings growth estimate is 48.3%.
The Q4 2021 blended revenue growth estimate is 13.5%. Seventy percent have reported revenue above analyst expectations, and 30% reported revenue below analyst expectations.
Exhibit 1: Refinitiv Earnings Dashboard
Source: I/B/E/S data from Refinitiv
Higher gasoline prices
Gasoline prices have been on the rise over the past weeks. In the retail space, there are several discounters that sell gasoline – and drivers are attracted by the competitive prices. Since the end of January, analysts polled by Refinitiv have been revising their estimates upwards for these discounters for Q1 2022.
Sam’s Club’s Same Store Sales estimate (SSS), including fuel, went up from 4.8% in January to 6.0% in March (Exhibit 2). The same can be said for Costco Wholesale, and BJ’s Wholesale SSS including fuel.
Notice how for the most part, the other discounters that don’t sell fuel have weaker SSS estimates for Q1 2022.
Exhibit 2: Discounters Same Store Sales Estimates Revisions: Q1 2022
I/B/E/S data from Refinitiv
As a result, investors could expect positive earnings surprises from Walmart and BJ’s Wholesale. Currently, Walmart has an EPS mean forecast of $1.47 for Q1 2022. However, there’s a five-star rated analyst with a very accurate rating that published a Bold Estimate, which is different (in this case higher) than the consensus estimate. The analyst expects Walmart to report EPS of $1.63, well above the mean.
The same can be said about BJ’s Wholesale which has an EPS mean forecast of $0.69 for Q1 2022 and has a Bold Estimate of $0.76.
The StarMine SmartEstimate is a weighted average of analyst estimates, with more weight given to more recent estimates and more accurate analysts. Our studies have shown that when the SmartEstimate differs from the consensus (I/B/E/S mean) by more than 2%, the company is likely to post subsequent earnings surprises directionally correct 70% of the time. This percentage difference is referred to as the Predicted Surprise (PS%).
The same can be said for supermarket owner Kroger, which also sells fuel. Its fuel rewards program has attracted new customers as prices at the pump soar. Currently, Kroger has an EPS mean forecast of $1.26 for Q1 2022. However, there’s a five-star rated analyst with a very accurate rating that published a Bold Estimate, which is different (in this case higher) than the consensus estimate. The analyst expects Kroger to report EPS of $1.51, well above the mean. It also has much higher estimates compared to Albertsons for Q1 2022 (Exhibit 3).
Exhibit 3: Same Store Sales and EPS Estimates: Q1 2022
I/B/E/S data from Refinitiv
Q4 2021 earnings
Of the 172 companies in the retail/restaurant index that have reported Q4 2021 earnings, 136 mentioned inflation and 163 mentioned the supply issues. Accordingly, the discounters are better poised to benefit in an inflationary situation compared to other retailers.
Here are this and next week’s Q4 2021 earnings and same store sales expectations:
Exhibit 4: Same Store Sales and Earnings Estimates–Q4 2021
Refinitiv I/B/E/S estimates
