Get 40% Off
🤯 This Tech Portfolio is up 29% YTD! Join Now to Get April’s Top PicksGet The Picks – Just 99 USD

Q2 2022 Earnings Season Closes Out with Retail And Enterprise Tech

Published 08/22/2022, 10:23 AM
Updated 08/29/2023, 10:02 AM
  • S&P 500 EPS growth for Q2 is unchanged from last week at 6.7%, the lowest level since Q4 2020
  • Retail reports last week showed a US consumer that was still strong in the second quarter, but that could be waning as we head into the second half of the year.
  • The LERI ends the season with the highest reading in a year-and-a-half, pointing to a general feeling of uncertainty amongst US corporations.
  • Q2 earnings season continues to wrap-up with final reports from retail and tech.

Last week we got some intel on the US consumer as retailers started reporting Q2 2022 earnings and July Retail Sales were published. While most of the news was positive, there were some hints of softening on the horizon. 

Big box retailers such as Walmart (NYSE:WMT) and TJX companies (NYSE:TJX), as well as home improvement names like Home Depot (NYSE:HD) and Lowe’s (NYSE:LOW) all reported better-than-expected earnings last week, while TJX and LOW missed Wall Street’s revenue expectations. Target (NYSE:TGT) on the other hand garnered most of the attention when they missed bottom-line estimates by 50%, with sales in-line with sell-side expectations. The huge miss came as the retailer has struggled to unload excess inventory in categories that are now dealing with waning demand such as apparel and homewares. 

And even as home improvement names were able to post decent results for the second quarter, the housing market showed signs of wear. July home sales fell nearly 6% MoM according to the National Association of Realtors, putting the US housing market in a recession according to the group. So far that hasn’t impacted forward estimates for HD and LOW which are still expected to post growth in H2 2022 and into 2023.

Retail sales for July were also reported last week, unchanged from June due in part to lower prices at the pump and falling auto sales. Excluding both gas and autos Retail Sales increased 0.7% for the month.

As Q2 Earnings Season Closes, LERI Ends At Its Highest Level in Over A Year

The LERI (Late Earnings Report Index) tracks which companies are confirming off-trend earnings dates. Academic research shows when a corporation reports earnings later in the quarter than they have historically, it typically signals bad news to come on the conference call, and the reverse is true, an early earnings date suggests good news will be shared. The idea is that you’d prefer to delay bad news, but when you have good news you want to run out and share it.

Despite better than expected earnings, the LERI is still at its highest level in over a year with a reading of 160, surpassing Q1 2020’s reading of 147 which reflects the uncertainty of the first few weeks of Coronavirus lockdowns globally. 

 A LERI reading over 100 indicates more companies are delaying reports and is meant to be watched carefully. While the LERI reading of 150 is the highest we’ve seen since Q4 2020, it’s still nowhere near as high as we saw in the last three quarters of that year in the midst of the COVID-19 pandemic and lockdowns. Those quarters clocked LERI readings of 1380, 656 and 309, respectively. In any case, a gradual increase this quarter continues to suggest that US companies are feeling uncertain about their future growth potential. In terms of raw numbers, 50 companies have confirmed earlier Q2 earnings dates, while 80 have confirmed later than normal earnings dates.

Late Earnings Report Index

Source: Wall Street Horizon

A Final Trickle of Retail And Tech Reports Out This Week 

This week earnings releases slow down dramatically, with the final group of reports concentrated within the retail and tech industries. We will hear from department stores Macy’s (M) and Nordstrom (NYSE:JWN), apparel names such as Urban Outfitters (NASDAQ:URBN), Abercrombie & Fitch Company (NYSE:ANF) and Gap Inc (NYSE:GPS), as well as enterprise tech players Splunk (NASDAQ:SPLK), Workday (NASDAQ:WDAY), and Zoom Video Communications Inc (NASDAQ:ZM). A few highly-followed names will also announce results: Nvidia (NASDAQ:NVDA), Peloton (NASDAQ:PTON), and Snowflake Inc (NYSE:SNOW).

Top Earnings Announcements This Week

Source: Wall Street Horizon 

Earnings Wave 

Earnings reports drop off precipitously this week with only 662 companies anticipated to report. Roughly 94% of companies have confirmed at this point (out of our universe of 10,000 global names), with 84% of those names reporting already. The Q3 2022 earnings season is scheduled to begin the week of October 10 when the big banks begin reporting. 

Latest comments

hi
Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.
© 2007-2024 - Fusion Media Limited. All Rights Reserved.