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This article was first published on blog.estimize.com

5 Stocks to Watch this Week 8/17

Monday, August 17

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Tuesday, August 18

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Wednesday, August 19

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Friday, August 21

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Urban Outfitters (URBN)

Very rarely does the Estimize community have a corporate earnings or revenue consensus that is lower than Wall Street’s, but this is the case for Urban Outfitters. Currently the Estimize consensus calls for EPS of $0.48 vs. the Street’s $0.49, meanwhile revenues are expected to come in at $877M vs. $883M. The company continues to struggle with its flagship brand, Urban Outfitters, while their other brands Anthropologie and Free People have had an incredible run, although more recently Anthropologie sales have slowed as well. imageA trend towards e-commerce has hurt stores such as Urban Outfitters who rely on in-store sales for a bulk of their revenues. While they have ramped up improvements to their e-commerce site, such sales come with thinner profit margins. Like many others in the apparel space, Urban Outfitters is likely losing marketshare to fast-fashion retailers such as H&M and Zara which service the same customer demographic. They’ve had to offer deeper discounts to compete. Last quarter same-store sales came in at 4% for the retailer, missing analyst expectations of 5.3%.

Wal-Mart Stores (WMT)

The world’s largest retailer has an Estimize EPS consensus for $1.15 as compared to Wall Street’s estimate for $1.12 and guidance of $1.16. The Estimize community is also expecting slightly higher revenues of $120.3B vs. $1.20.2B. Retail sales over the last couple of months have shown increased consumer health in the U.S., with the likes of Wal-Mart benefitting from lower fuel prices and increased consumer confidence. However, retail results from this earnings season have been mixed thus far, with department stores such as Macy’s and Kohl’s missing results last week, while Nordstrom and J.C. Penney surprised on the upside. imageA few concerns for Wal-Mart revolve around competition, with the likes of e-commerce giant Amazon stealing marketshare with it’s Prime subscription service. Wal-Mart recently offered its own subscription shipping service, free shipping on most items for $50 a year. However, the service does not come with streaming video and cloud storage like Prime does, and also means lower profit margins due to increased shipping costs and price competition. Also, Wal-Mart will continue to see the impact of increased costs. The retailer raised entry level wages to at least $9/hour in April, and will increase wages to at least $10/hour by February 2016, a feat that will cost at least $1B.

Home Depot (HD)

Next week we also get a few reads on the housing market when earnings for Home Depot and Lowe’s are released. The Estimize community is currently looking for EPS of $1.72, two cents higher than the Street, with sales roughly in-line at $24.7B. After incredible results in the first quarter the company increased guidance for fiscal 2015. The home improvement retailer has been benefitting from the continuing recovery in the U.S. housing market, especially during the peak spring and summer season. When home prices appreciate as they have been, consumers typically invest in their properties. imageHome Depot has been stealing some market share from Lowe’s this year as they deal with negative headlines from carrying Chinese laminate flooring that contained formaldehyde, a possible carcinogen. Home Depot also only has domestic locations, but their exposure to international markets still makes them vulnerable to currency fluctuations. The stock just traded at a new all-time high of $119.74 on Friday.

American Eagle Outfitters (AEO)

While many teen retailers have been losing market share to the fast fashion circuit, American Eagle Outfitters has been holding its own. For the second quarter the specialty retailer is expected to post EPS of $0.16 as compared to the sell-side expectations for $0.14. The Estimize community expects sales to come in at $770.5M vs. Wall Street’s consensus of $762.5M. imageAmerican Eagle Outfitters put up superb results in Q1, beating on both the top and bottom-line, and even growing EPS 650% from the year-ago period due to improving sales, a decrease in promotional activity and progress in its omni-channel business. That report caused the company to release positive guidance for the second quarter, issuing an EPS outlook of $0.11 – $0.14, higher than analysts were predicting at the time. The second quarter should prove to be even better in the second quarter without the impact of harsh winter weather and delays from the West Coast ports.

Foot Locker (FL)

The Estimize EPS consensus for FL currently stands at $0.75 as compared with the Street’s $0.69, an indicated increase of 19% YoY. Revenues of $1.66B are in-line. imageAthletic wear has seen a surge in popularity in the past couple of years, and basketball shoes specifically are having a moment. Foot locker had the most profitable quarter in its history in Q1, with same store sales increasing 7.8%. Predictions aren’t quite as high for the current quarter, with comparable store sales expected to be in the mid-single digits, and then shooting up to the high single digits in Q3 due to an expectedly strong back-to-school shopping season. Management should be able to give some clues this week as to how the back-to-school season is faring thus far, and investors will also be keen to hear about the company’s plan for further expansion into Europe.

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