4 out of 8 companies report y-o-y decline in EPS this week – Earnings Scorecard

This week, Wall Street saw a recovery rally as U.S. stocks rebounded from last week’s global selloff, easing recession fears. Positive economic data, including strong retail sales and jobless claims, along with upbeat earnings reports, fueled the market’s bounce back.

Key U.S. stock market averages ended higher this week such as the S&P 500 (SP500) was up 3.9% at Friday’s market close supported by upbeat comments from Walmart and strong corporate earnings, which suggested that recession concerns may have been overstated leading to the anticipation of potential interest rate cuts by the Federal Reserve in September.

On y-o-y basis, 4 companies reported y-o-y decline in EPS and revenue.

Additionally all the 8 companies that reported earnings this week beat profit estimates pushing the indices to climb, boosting confidence that the U.S. economy is avoiding a recession. On the revenue side, 7 out of 8 companies beat estimates. The retail sector was at the forefront of the rally after earnings beat from retail giants like Walmart (WMT) and Home Depot (HD) and a better-than-anticipated July Retail Sales report.

Among consumer companies, Walmart (WMT) jumped on strong earnings, as the retail giant lifted its annual outlook and said all parts of the business were clicking. The company’s EPS came in at $0.67, beating the consensus mark of $0.65.

Home Depot (HD) also beat profit expectations and reported EPS of $4.67 for the quarter, compared to the consensus estimate of $4.55. The company however forecast its full-year guidance below expectations. The company’s earnings call with analysts allayed investors’ fears over sluggish consumer spending as CEO Edward Decker assured that “long term fundamentals in home improvement are strong”.

Tapestry (TPR), the parent company of Coach and Kate Spade, soared after it reported an adjusted profit of $0.92 per share, better than the consensus estimate of $0.88 per share, fueled by consistent demand for its luxury items despite a more cautious consumer.

Technology giant Cisco (CSCO) climbed during post-market trading Wednesday after it reported its fourth quarter earnings above estimates and reported plans to reduce its global workforce by 7%.

For the upcoming week, a number of S&P 500 companies are scheduled to report results, with the likes of Estee Lauder (EL) and Palo Alto Networks (PANW) on Monday. Tuesday is expected to include Lowe’s (LOW), Medtronic (MDT), and Keysight Technologies (KEYS) while Analog Devices (ADI), Target (TGT), TJX (TJX), Agilent Technologies (A) , Nordson Corp (NDSN) , and Synopsys (SNPS) are expected to report earnings on Wednesday.

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