Is Retail Sector's Momentum Sustainable?

 | May 10, 2015 01:09AM ET

The Q1 earnings season has effectively come to an end for most of the major sectors, with the Retail sector as the only one that has a significant number of reports still awaited. While the overall earnings picture is quite weak, with not much growth and estimates for the current period coming down, the Retail sector has had fairly good run thus far in the Q1 earnings season.


With a number of retailers like Macy`s Inc (NYSE:M), Nordstrom Inc (NYSE:JWN) and others reporting results this week, it will be interesting to see if the sector can maintain the performance momentum it has shown thus far. In total, we have more than 400 companies reporting results this week, including 15 S&P 500 members. By the end of this week, we will have seen Q1 results from 93% of the S&P 500 members.

Retail Sector Scorecard

As of Friday February May 8th, we have seen Q1 results from 22 retailers in the S&P 500 index (out of the 42 total) that combined account for 55.7% of the sector’s total market cap in the index. Total earnings for these 22 retails are up +7.5% from the same period last year, on +11.7% higher revenues, with 90.9% beating EPS estimates and 54.5% coming ahead of top-line expectations.

This is better performance than we have seen from these 22 retailers in other recent periods, as the comparison chart below shows. Importantly, the sector’s earnings beat ratio is currently the highest of all 16 sectors and its revenue beat ratio is the second highest (second only to Medical).