Outlook for Retail Stocks Based on Recent Activity
How Are Retail Stocks Shaping Up in the Market?
With the considerable volatility across markets observed in recent weeks many investors and day traders are bound to be concerned with the viability of their existing investments as well as future trades. US markets have been in a rally mode recently that brings them back on a positive note for 2015. Earnings outlooks reported by leading corporations helped the S&P 500 achieve four consecutive weeks of gains, although the index remains down 2.6% from the high experienced in May.
With the holiday season rapidly approaching investors will be looking for signals that impact their investment strategy in retail markets.
Shoe retailer Skechers reported missing their earnings projected by analysts resulting in a drop in share values of nearly a third. But with the company’s strong growth pattern both net income and revenue were on the positive side. Some analysts expressed concern with the fact that Skechers CEO Robert Greenberg recently sold stock amounting to $74 million ahead of the earnings disclosure. This raises integrity and credibility questions for analysts and investors alike.
Proctor & Gamble the Cincinnati-based consumer goods giant beat Wall Street expectations despite disappointing earnings reports disclosed last Friday. P&G management attributed these results partially to the significant transformation that the company is in the process of executing – the largest in the company’s history. P&G is divesting itself of businesses that are not profitable and undertaking cost-cutting efforts while also striving to improve their agility in responding to changing markets and to develop more innovative products for consumers.
What about Walmart? The world’s largest retailer expressed to the business community that earnings are expected to decline for 2016 and 2017. Shares dropped by nearly 9% in early trading, dropping the company’s market cap by nearly $18 billion and shaking up those who are heavily invested in Walmart stock, notably Walton family holdings and Berkshire Hathaway. One of the contributing factors to the earnings decline is the company’s planned investment in “salaries and training” over that time period.
What Analysts Are Saying About the Retail Stock Outlook
While there are concerns associated with Walmart’s lower earnings expectations most analysts are expressing belief that this is largely isolated to Walmart due to their focus on growing salary costs. This is further impacted by the company’s plans to transform distribution centers to facilitate ecommerce business needs.
With that in mind analysts are anticipating improved holiday season results as compared with the prior year’s due to increased consumer confidence in the economy in general and expectations that new fashion trends will spur growth in that market segment. Competition will be keen with the consumer benefiting from lower prices and free shipping offered by many online retailers. Lower oil prices and declining unemployment combine to provide shoppers with more expendable income for goods and services.
Investing in Retail Stocks?
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Disclaimer: SureTrader Blog is not intended for U.S. persons. Stock information is not to be viewed as buy or sell recommendations.