After Walmart Earnings, Which Retail Stocks Are Best Right Now?

Shares of retail behemoth Walmart (NYSE:WMT) gained about 1.75% in morning trading Thursday after the company released its latest earnings report. For the second quarter of fiscal 2017, Walmart posted earnings of $1.07 per share on revenue of $120.9 billion.

Walmart’s earnings beat out the Zacks Consensus Estimate by 5 cents, while its revenue figure grew 0.5% year-over-year and beat our consensus estimate by 0.7%. Overall, Walmart saw declines in international sales and Sam’s Club, which were mostly offset by strong growth in its Walmart U.S. division.

For the third quarter of fiscal 2017, Walmart expects earnings in a range of 90 cents to $1.00 per share, which would be down from the comparable quarter’s earnings of $1.03 per share but in-line with the current Zacks Consensus Estimate of 94 cents per share.

(Also Read: Wal-Mart Q2 Earnings and Sales Beat on Comps Gain)

With two slight beats and relatively good guidance, Walmart’s earnings report was impressive but not mind-blowing. If anything, it shows us that, despite an inconsistent earnings season, the retail environment has bounced back nicely.

After Walmart’s earnings, the spotlight is firmly on the retail sector. Check out these three stocks that could be poised to perform even better than WMT:

1. Dollar Tree (NASDAQ:DLTR) –Zacks Rank #2 (Buy)

Dollar Tree, which doesn’t report until September 6, looks to be set up for another strong earnings announcement after beating the Zacks Consensus Estimate by 11.25% last quarter. The company has seen one positive estimate revision in the past 60 days, which has moved our consensus estimate up by a penny.

Dollar Tree also has a positive Earnings ESP of 4.11%, which, paired with its strong Zacks Rank, implies that the company is more likely to post an earnings beat. Right now, the Zacks Consensus Estimate for its upcoming earnings stands at 73 cents per share, which would represent growth of 192% year-over-year. This has helped earn the stock an “A” grade for Growth and an overall VGM score of “A.”

If Dollar Tree can beat expectations and guide well for the remainder of the year, it should be ready to soar.

2. Burlington Stores (NYSE:BURL) –Zacks Rank #1 (Strong Buy

Burlington Stores is set to announce its latest earnings data next week, and the company will be looking to continue its strong run after beating the Zacks Consensus Estimate by an average of 23.19% in the trailing four quarters. In the past 60 days, Burlington has seen four positive estimate revisions, sending the Zacks Consensus Estimate six cents higher in that time.

When Burlington reports next week, we expect the company to post earnings of 29 cents per share on revenue of $1.24 billion. If those figures hold up, it would represent growth of 54% and 8.3%, respectively.

We have also seen six positive revisions for Burlington’s full-year earnings and five positive revisions for its next-year earnings within the past 60 days, which means a strong report next week could be just the beginning of a lengthy stretch of success for the company.

3. Nordstrom (NYSE:JWN) –Zacks Rank #1 (Strong Buy)

While the previous two companies have yet to report, Nordstrom makes the list based on its strong results from last week. The company posted earnings of 67 cents per share, which beat the Zacks Consensus Estimate by 12 cents. Since then, the stock has gained nearly 15%.

As a result of its strong report, we have seen six positive revisions for Nordstrom’s current-quarter earnings over the past week, and the Zacks Consensus Estimate has gained two cents already. This stock also has an “A” grade for Value and an overall VGM score of “A.”

Nordstrom posted impressive results last week and the stock should continue to ride that momentum going forward.

Bottom Line

For many investors, Walmart is one of the go-to stocks in the retail sector. While its earnings report was certainly not bad, Walmart did leave a little left to be desired, and the recovered retail sector is home to several other strong stocks right now. Investors looking to get into this space after Walmart’s earnings announcement should definitely consider the three companies on this list.