Off-price retailer Ross Stores crushed earnings estimates for the third quarter and gave strong outlook late Thursday. ROST stock soared Friday. Among other retailers TJX stock edged higher, while BJ's was narrowly positive.
BJ's Wholesale Club delivered a third-quarter beat-and-raise early Thursday, but BJ stock plunged below a buy point on soft 2023 outlook. BJ shares staged a narrow bounce early Friday.
On Wednesday, TJX beat earnings views for the third quarter, but missed slightly on revenue. Discount giant Target badly missed earnings views Wednesday and guided low for the holiday fourth quarter.
BJ stock holds a spot on IBD Leaderboard as an earnings option. The warehouse chain was also a recent IBD Stock of the Day.
IBD Live: A New Tool For Daily Stock Market Analysis
Ross Stores Earnings
Late Thursday, Ross Stores posted EPS of $1 as revenue fell 0.2%. Wall Street had forecast that Ross Stores earnings will plunge 25% to 81 cents per share, with revenue dropping 4.5%.
The off-price retail chain also updated Q4 guidance citing " third quarter sales momentum and improved holiday assortments." It now expects EPS of $1.13-$1.26 vs. $1.04-$1.21 prior. Analyst expect $1.22, FactSet shows.
Ross Stores soared more than 15% to 112.71 on the stock market today, after closing up 1.5% to 97.93 on Thursday. ROST stock is now well extended from a 95.93, six-week cup-base entry, meaning shares are not in buy range.
BJ's Wholesale Club Earnings
Early Thursday, BJ's Wholesale Club reported earnings per share rose 9% to 99 cents, with revenue up 12.4% to $4.785 billion.
Analysts polled by FactSet had expected BJ's earnings to shrink 8% to 84 cents per share. Revenue was seen likely to increase 9.6% to $4.674 billion.
The warehouse club chain, which retails groceries, gasoline and general merchandise, also reported strong comparable same-store sales growth of 5.3% excluding gasoline. BJ's also raised its fiscal 2022 forecast to $3.70-3.80.
But on an earnings call, management indicated that 2023 earnings could be slightly lower than 2022, suggesting the $3.92 FactSet consensus is too high.
"Upside was driven by continued sales momentum and (we believe) strength in fuel," Wells Fargo analyst Edward Kelly wrote in a note Thursday. He estimated higher fuel margins added about 5 cents to BJ earnings per share.
The analyst rates BJ stock at overweight, citing the retailer's "strong value position, defensive product offering, and a positively evolving fundamental outlook." He tied the post-earnings shares plunge to 2023 guidance.
"The key issue is a difficult fuel margin comparison... which we believe could represent a 20-cent to 25-cent headwind in fuel margins next year," Kelly said.
BJ Stock
Shares lost 1.8% Friday after plunging 5.6% Thursday, undercutting the 50-day average. BJ stock dropped more than 7% to 8% below a 78.93 cup-with-handle buy point. That triggered the automatic sell rule. However, Leaderboard investors bought in using an options strategy. The risk was in the cost of the option. Those investors can now see whether BJ's stock rights itself or not.
TJX Earnings
Estimates: Analysts expected TJX earnings for the October quarter to decline 4.7% to 80 cents per share. Revenue was seen falling 1.9% to $12.299 billion. Same-store sales in the U.S. were seen down 4.4%.
Results: TJX earnings rose 2% to 86 cents a share, following Q2's 13% decline. Revenue slid 2.9% to $12.17 billion. Same-store sales in the U.S. fell 2%.
In the U.S., Q3 revenue grew 3% at Marmaxx and fell 14% at HomeGoods. Marmaxx — which includes the T.J. Maxx, Marshalls, and Sierra stores — is the company's biggest revenue segment. Q3 revenue fell in Canada and other international markets.
Q3 EPS was "above plan largely due to a benefit from the timing of expenses," most of which TJX Cos. expects will reverse out in the fourth quarter, the TJX earnings release Wednesday said.
"Across our geographies, our values and exciting, treasure-hunt shopping experience continued to resonate with consumers throughout the quarter," CEO Ernie Herrman said in the release.
"Looking forward, while not immune to macro factors, we are convinced that our flexible business model and value proposition will continue to be tremendous advantages, as they have been for more than four decades and through many kinds of retail and economic environments," he added.
Outlook: TJX sees Q4 EPS of 85-89 cents, slightly below consensus.
TJX Stock
Shares gained 2.4% Friday, far above the 50-day and 200-day moving averages. TJX stock on Tuesday climbed back above the 73.11 buy point of a long cup-with-handle base, which shows up on the weekly MarketSmith chart. It fell 1.1% Monday to close below that entry. The buy range stretches to 76.77.
The relative strength line for TJX stock is almost back near early November highs after surging over the summer.
Recession-Resistant TJX Stock
On Oct. 17, JPMorgan said bargain retailer TJX is competitively positioned to navigate a recession. That optimism pushed TJX stock higher, extending a tidy rally over the summer.
For Q3, TJX earnings are expected to be relatively resilient vs. the performance of full-price retail peers. Amid the rapid rise in inflation, customers appear to prefer shopping at stores that offer bargain and discount deals.
