uploads///Wal Mart versus Costco Wholesale

Retailers Rebounded on November 17, Led by Walmart and Home Depot



Retailers made a comeback

The retail sector went through a recent sell-off due to its negative outlook toward sales forecasts and consumer spending behavior. This sector rebounded on Tuesday, November 17, with the S&P 500 Retailing (Industry Group) Index gaining 1.05% on the day.

Macy’s (M) stock prices declined after it reported its 3Q15 earnings results, forecasting a negative outlook for its retail sales of the year. Apparel retailer Urban Outfitters (URBN) landed at the bottom of the SPDR S&P 500 ETF (SPY) on Monday, November 16. This left investors cautious about consumer spending habits. However, Walmart’s (WMT) and Home Depot’s (HD) gains on November 17 led to the rebound of the retail sector.

The following graph compares the stock price movements of hypermarket retailers Walmart (WMT) and Costco Wholesale (COST) since October 2015.

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On November 17, Walmart (WMT) gained 3.5% while Costco Wholesale (COST) rose 1.6%. WMT traded at $59.92, which was above its 20-day moving average but below its respective 50-day and 100-day moving averages. The trailing one-month return of the stock was 1.8% as of November 17. The trading volume of WMT stock surged to 24,679,343 shares from the previous day’s volume of 13,321,644 stocks after the company reported its 3Q15 earnings results.

According to its earnings report, WMT’s earnings per share (or EPS) beat expectations, but the company missed its revenue estimates. The company reported EPS of $1.03 per share against the estimated $0.98 per share. Walmart’s revenues came in at $117.4 billion compared to the estimated $117.79 billion.

The analysts’ stock price target is set at $63.46. Walmart’s (WMT) stock has received five “buy,” 24 “hold,” and two “sell” recommendations. Standard & Poor’s rated WMT stock as “AA” with a “stable” outlook.

Home Depot gained on a bullish sales stance

Home improvement giant Home Depot (HD) rose 4.4% on Tuesday, November 17, after the company’s management backed solid sales growth for the year. With this background, the stock of competitor Lowe’s (LOW) also rose 1.7% on the day. Both companies reported their quarterly earnings on Wednesday, November 18.

E-commerce retail sales for 3Q15 showed a rise of 4.2% and a growth of 15.1% year-over-year according to the report released by the Commerce Department on November 17, offering some good news on the retail front.

In the next article, let’s look at the key stocks of SPY on the day.


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