More From Mark Jonker
Fund Flows Show Optimism in the Consumer Discretionary Sector
The SPDR S&P Retail ETF (XRT), which has exposure to around 100 US retail stocks, saw net inflows of $335.4 million over the week starting November 16, 2015.
High Price Food Retailers Suffer as Off-Price Retailers Gain
A recent trend in the food industry is that high priced food retailers have been struggling to attract customers to their stores.
How Has the Putnam Global Consumer Fund Performed?
The Putnam Global Consumer Fund (PGCOX) is an open-ended mutual fund that has performed really well over the years.
Office Depot: Why the Stock Seems to Have Bottomed Out
Office Depot’s (ODP) fundamental performance has taken a toll on the company’s stock price.
Department Stores Performed the Worst in November’s Retail Report
The department store index performed the worst of all retail subsector indexes in November, falling by 12.3%.
Wall Street Sizes Up Macy’s: Is a Bottom Forming Yet?
The consensus analyst recommendation on Wall Street for Macy’s (M) is “hold,” which 13 out of 23 analysts recommend.
Gap Falls 37.6% in 2015
Gap (GPS) has fallen 37.6% YTD (year-to-date) as of December 29, 2015. Its peers Ross Stores (ROST) and L Brands (LB) have risen 17.7% and 18.2%, respectively.
Kate Spade: Wall Street Says ‘Buy’
The consensus analyst recommendation for Kate Spade’s (KATE) stock is “buy,” which was given by 70.0% of the Wall Street analysts surveyed.
Automobiles and Parts Slowed Growth In Retail Sales
The retail and food services sales for November 2015 grew by 0.4% if we exclude automobiles and parts retail sales, as the latter section fell by 0.4%.
Do L Brands’ Fundamentals Justify Its Valuation versus Its Peers?
In the recent fiscal year, L Brands’ (LB) revenue grew at a rate of 6.32% on a YoY basis. In contrast, the CAGR has been 4.50% over the last four years.
When Will Gap Stock Bottom Out?
Gap (GPS) stock has declined by ̴~17.0% over the last three years as of February 26, 2016.
Continuing Claims Decrease, but Only Marginally
Continuing claims numbers stood at 2,257,000 for the week ended August 22, which were lower than the 2,266,000 figure the previous week and a decrease of 0.4%.
Fossil Group Stock Has Been Pressured Due to Weak Fundamentals
Fossil Group’s stock opened 28% higher than its closing price on February 16, 2016, as it exceeded expectations. If we look at its post-rally price return over the last year, the stock has returned -47.3%.
Mutual Funds: A Comparative Analysis Using Jensen’s Alpha
Jensen’s alpha determines how much extra return a fund has earned above the expected return while considering the non-diversifiable risk of the market.
Most Analysts Recommend to “Hold” Staples’ Stock
Out of the 17 analysts covering Staples’ stock, 65% have given it “hold” recommendations, whereas the remaining 35% have given it “buy” recommendations.
Why Consumer Staples ETFs Fell Marginally
The Consumer Staples Select Sector SPDR ETF fell by 0.4% on November 4, while the Vanguard consumer Staples ETF saw a 0.53% fall in its price.
Retail Sector ETFs Fell Globally after Strong Jobs Report
The US Strong Jobs Report was released on Friday, November 6. The retail sector was one of the worst affected as global markets plummeted in anticipation of a rate hike by the Fed.
What Investors Need to Know about Valuation Price Multiples
Valuation price multiples are used in the relative valuation technique. This is the most common method used by Wall Street to value stocks.
Why Did Office Depot’s Sales Fall So Much in 4Q15?
In 4Q15, Office Depot’s (ODP) sales (VCR) fell 9%. Sales responded to the closure of 56 stores in North America, which had a negative impact of 4.0%.
Tractor Supply’s 3Q15 Earnings Beat Estimates
Tractor Supply (TSCO) reported its 3Q15 earnings after the market closed on October 21. The stock rose by 5.5% due to the strong performance in 3Q15.
Will Dollar General Meet Consensus Estimates for 4Q15?
Dollar General (DG) updated its guidance for fiscal 2015. It narrowed its range for its adjusted EPS for fiscal 2015 from $3.85 to $3.95 to a range of $3.88 to $3.93.
Gap and Its Struggle with Performance
Gap (GPS) is expected to release its fiscal 3Q15 earnings on November 19, 2015. Wall Street expects Gap’s adjusted EPS to be around $0.63, a decrease of 15.2% from 3Q14.
Warm Winter Cooled Down Tractor Supply Sales
Tractor Supply (TSCO) saw a considerable decrease in its organic sales growth. The main reason for the decrease was the warmer-than-normal winter conditions across the country.
Michael Kors: Stock Soars as Investors Find Value
Michael Kors stock rose on February 2. The comp numbers improved. Investors saw the value that the international business can add to the company.
Tractor Supply’s Earnings Were in Line with Expectations
Tractor Supply (TSCO) released its 4Q15 earnings on January 27, 2015. Adjusted EPS was $0.82, which was in line with expectations. Sales increased only 3.9%.
Continuing Claims Increase, but There’s a Decreasing Trend YTD
Continuing claims numbers were released with the Initial Jobless Claims report on November 5. The number was 2,163,000 for the week ended October 24, an increase of 0.8% from the previous week.
How Has Kate Spade Performed Historically?
Kate Spade (KATE) (VCR) has been very successful in penetrating the North American and international markets.
Kate Spade: How Did It Shape Up in 4Q15?
Kate Spade (KATE) released it 4Q15 earnings for the quarter ended January 31, 2016, on March 1, 2016.
How Has Dollar General Stock Been Performing?
Dollar General (DG) stock has risen 2.2% in the last one year as of February 29, 2016. DG has provided a dividend of $0.88, and the total return of the stock has been 3.4%.
Strong Fundamental Growth: The Backbone of Dollar General Stock
Dollar General (DG) (XLY) has been highly consistent growing its top line with high single-digit growth. So far this year, DG has averaged 8.0% growth.
What Do Analysts Recommend for Gap Stock?
Wall Street analysts are expecting Gap’s 1Q16 adjusted EPS to decrease by 13% on a YoY basis to $0.49 and the fiscal 2016 adjusted EPS to decrease by 7.0% to $2.27.
Dollar Tree: A Positive Mix of Organic and Inorganic Growth
Dollar Tree (DLTR) (XRT) (XLY) is pretty consistent for extracting organic growth from its business, seeing growth in the mid-single digits over the years.
Good Picture: Organic and Inorganic Growth in Retail Revenue
Michael Kors pulled off a mix of organic and inorganic growth. The company’s retail sales grew by 15.7% on a constant currency basis.
Michael Kors’s Earnings Surprised Wall Street Analysts
Michael Kors (KORS) reported its earnings on February 2, 2016. It sent the company’s stock 24% higher. The earnings beat Wall Street analysts’ estimates.
Gap’s Stock Gets a Hold Recommendation from Wall Street Analysts
The consensus analyst recommendation for Gap’s (GPS) stock is a “hold.” As seen in the chart above, 60.5% of the analysts covering the stock have given it a hold.
Consumer Confidence and the Retail Sector
The SPDR S&P Retail ETF, which could be substituted for the US retail sector, has shown a positive relationship with the Consumer Confidence Index.
The TJX Companies: Wall Street Recommends Buying the Stock
Among its closest peers, The TJX Companies (TJX) (XLY) is the only company that received a “buy” consensus analyst recommendation by Wall Street.
Consumer ETFs Decline in the Face of the Fed’s Rate Hike Decision
During the week ending on December 11, the consumer sector saw notable declines, given fears that the Fed will hike the interest rate on December 16.
Consumer Discretionary ETFs Rose on Backdrop of Positive Earnings
The week ended December 4, 2015, saw consumer discretionary stocks rise on the backdrop of some positive earnings and macroeconomic releases.
Technical Indicators Still Bullish, but Only by a Small Margin
Most consumer discretionary ETFs traded above their simple moving averages. But the margin reduced considerably over the first week of December.
Dollar General’s 3Q15 Sales Were Driven by New Store Openings
In 3Q15, Dollar General’s (DG) sales grew by 7.3%, which is quite impressive compared to its peers like Dollar Tree (DLTR) and Target (TGT).
Why Can’t Macy’s Generate Organic Growth?
Macy’s (M) has been struggling with sales growth due to declining organic growth. In the last four quarters, its same-store sales growth has averaged -1.2%.
Wall Street Continues Its Optimism about E-Commerce Stocks
Although e-commerce is a relatively new retail-related industry, this subsector is well-developed in the US compared to other global regions.
Technical Indicators Improve for Consumer Discretionary Sector
The consumer discretionary sector’s 14-day RSI has been moving toward the 70 mark. It can be expected to cross the mark over the next month.
How’s Dollar Tree Stock Trading Compared to Its Peers?
Dollar Tree (DLTR) stock rose by 6.5% on a YTD (year-to-date) basis as of November 25, 2015. It hasn’t provided any dividend.
Organic Sales Growth and Margin Expansion in Fiscal 3Q15
In fiscal 3Q15, L Brands saw a significant margin expansion both in its gross profit margin and operating margin. The gross profit margin expanded by 80 basis points.
Why Consumer Discretionary ETFs Are on the Rise
The Vanguard Consumer Discretionary ETF (VCR) and the Fidelity Consumer Discretionary ETF (FDIS) both rose by 3.3% on a weekly basis, as of November 23.
Mutual Funds: A Comparative Analysis Using the Sortino Ratio
The Sharpe ratio can sometimes be unfavorable for stocks that have high upside volatility. To prevent this, we can use the Sortino ratio.
Mutual Funds: A Comparative Analysis Using R-Squared Values
The R-squared value is a statistical measure that compares the movement of a fund against that of its benchmark index.
Mutual Funds: A Comparative Analysis Using Information Ratios
The information ratio can be used evaluate the performance of an actively managed fund.
What Do Wall Street Analysts Think about Gap Stock?
Of the 38 Wall Street analysts covering Gap (GPS) stock, 24 have given it a “hold” recommendation. Nine investment firms have recommended a “sell” for the stock.
Mutual Funds: A Comparative Analysis Using the Treynor Ratio
The Treynor ratio calculates how much an investment has earned above the risk-free market rate for every unit of risk assumed.
Mutual Funds: A Comparative Analysis Using the Sharpe Ratio
Investors often use the Sharpe ratio to gauge the performance of portfolios of investments.
An Overview of Consumer Discretionary Mutual Funds
In this series, we’ll analyze some high performing consumer discretionary mutual funds using risk-adjusted performance measures.
Will L Brands’ Comparable Store Sales Growth Be a Major Driver?
L Brands (LB) has seen impressive top-line growth. A major reason for the growth has been its comparable store sales growth.
Initial Jobless Claims Remained Steady: What Does It Mean?
The U.S. Department of Labor released its weekly statistics for initial jobless claims for the week ending November 7, 2015. They stayed the same at 276,000.
Focus Should Be on Consumer Discretionary Sector Earnings
After U.S. Department of Labor data released on Friday, November 6, 2015, all eyes should be on the earnings of consumer discretionary sector (XRT).
Emerging Market Retail ETFs Are Trending Downward
Emerging market ETFs have been declining over deflationary pressures in the markets. The high downside volatility seen in stocks of emerging markets have made investors think twice before investing.
US Unemployment Rate Fell in October
The unemployment rate for October 2015 stood at 5.0%. When compared to the previous month, it has reduced by 0.1% and is the lowest since 2008–2009.
Strong Wage Growth Was Seen in October
As of October 2015, wages have now grown by 2.5% on a year-to-date basis, which is the highest growth since 2010.
XRT ETF Fell as Earnings Disappointed
The XRT ETF fell by almost 6% in the last three months due to some weak macroeconomic indicators and disappointing earnings in the last quarter of 2015.
Tractor Supply’s Margin Performance and DuPont Analysis
Tractor Supply Company (TSCO) grew its gross margin by 60 basis points from 34.1% a year ago. This had a positive impact on the cost of freight.
University of Michigan Consumer Sentiment Index Rises
On October 16, 2015, the University of Michigan released its consumer sentiment index. The index rose 4.9 points to reach 92.1 for October.
How Important Are Retail Sales to the US Economy?
Two-thirds of the US GDP comes from PCE (personal consumption expenditure), where retail sales play a significant role.
Analyzing the Johnson Redbook Same-Store Sales Index
Redbook Research released its report for the week ending October 10, 2015. The same-store sales index rose 1.1% on a YoY basis. It fell by 0.20% last month.
ICSC-Goldman Sachs Retail Chain Store Index Fell
The ICSC-Goldman Sachs Retail Chain Store Index showed a similar fall in comparable sales for US retailers. It fell by 0.20% for the week ending October 10.
DuPont Analysis of Nordstrom against Its Peers
The Dupont equation breaks Nordstrom’s return-on-equity into three parts, which are net income margin, asset turnover, and financial leverage.
Breaking Down Nordstrom’s Revenue Growth
In the last fiscal year, Nordstrom’s revenue growth was 7.7%, a substantial number when compared to its peers.
Unemployment Rate and Hourly Earnings Remain Flat
September’s unemployment rate stood at 5.1%, which did not change from the previous month, but on a YTD (year-to-date) basis it is the lowest of the year.
A Company Overview of Nordstrom
Nordstrom’s stock has been performing quite well on Wall Street, increasing 30.4% in the last three years.
Mixed Consumer Perception of the Economy
The United States is highly dependent on consumer spending, and consumer perception acts as an indicator of consumer spending in the future.
Consumer Income and Spending Increase
Increase in consumer income and spending is highly positive for the SPDR S&P Retail ETF, which has exposure to 101 of the country’s retail stocks.
How Has the Fidelity Select Consumer Discretionary Portfolio Performed?
The Fidelity Select Consumer Discretionary Portfolio (FSCPX) is an open-ended mutual fund that invests in companies that manufacture and distribute consumer discretionary goods and services.
How Has the Fidelity Select Retailing Portfolio Performed?
The Fidelity Select Retailing Portfolio (FSRPX) has outperformed both the S&P 500 (SPX) broad market index and the SPDR S&P Retail ETF (XRT).
L Brands Is an Outlier in the Apparel Retail Industry
L Brands (LB) is one of the prominent specialty retailers in the US. It focuses on apparel, personal care, and beauty care products.
The Unemployment Rate Hits a 7-Year Low
The unemployment rate for August provided a huge relief for the US economy when it fell to its lowest figure since the crisis of 2008. August’s unemployment rate stood at a staggering 5.1%.
A Glance at Family Dollar’s Historical Performance
Over the last five years, Family Dollar was able to generate a five-year CAGR revenue of 7.2%. That looks decent when you look at it alone. But let’s compare it to its peers.
Dollar Tree’s Debt Levels Are on the Rise Due to Acquisition
In 2Q15, Dollar Tree’s (DLTR) long-term debt on the balance sheet was $8,265.5 million. In 2Q14, it was $740.2 million. The increase was due to a massive amount of debt to finance the Family Dollar acquisition.
How Are Dollar Tree’s Revenue Drivers Shaping Up?
Dollar Tree (DLTR) has three important revenue drivers responsible for top-line growth. This growth is comparable to store sales growth, changes in sales area, and new area maturity.
What Does the ShopperTrak Retail Traffic Index Indicate?
Retail traffic dipped in July 2015 after increasing in June 2015. The July numbers came in 17% below what was recorded by ShopperTrak in June.
Bloomberg Consumer Comfort Index Increases after Significant Fall
The Bloomberg Consumer Comfort Index is a future-looking index that gives Wall Street an idea about how confident consumers are in regards to the future of the economy.
Prominent US Same-Store Sales Indexes Picked Up in July
Two of the most well known same-store sales indexes in the US increased 3.1% and 1.9% year-over-year.
What Do Recent Retail Sales Trends Indicate?
After the June figures not meeting the expectations, investors had a smile on their faces when the July retail sales number increased 0.6% month-over-month, beating the consensus of 0.5%.
The Relationship between the Retail Industry and the US Economy
When we compare the S&P 500 (SPX) with the SPDR S&P Retail ETF (XRT), the retail ETF has beaten the broad market index on a trailing one-year basis.
How Are Consumer Confidence and the Retail Sector Related?
Consumer confidence is one of the major factors that affect consumer spending. As a result, the retail sector has had a direct relationship with this metric.
Is Relative Valuation Alone Sufficient to Value Retail Companies?
When we talk about retail valuations, it is important not to generalize that all the companies in the SPDR S&P Retail ETF can be valued using the PCF or the PS multiple.
How Are Brick and Mortar Retail Companies Valued?
Brick and mortar retail companies have high inventory levels and are very capital-intensive companies that require a significant amount of working capital and capital expenditure.
SUPERVALU’s Spin-Off and the Creation of Value
Recently, SUPERVALU (SVU) announced that it’s planning to spin off its most valued segment—Save-A-Lot. It’s comprised of 1,300 discount grocery stores.
Walmart Versus Amazon: Future Prospects
When it comes to the future prospects of Walmart and Amazon, it is important for investors to look at the nature of their businesses.
Walmart Versus Amazon: Historical Performances
Amazon has returned 446% over the last five years, while Walmart has returned only 140% to its investors over the same period.