Analysts Tell The Story Of Last Week's Hardlines Earnings Season

In a report issued Friday, analysts at Deutsche Bank look into the hardlines earnings season – particularly, 11 hardline retailers that reported results in the past week and a half.

Among the 11 companies included in the note, six managed to beat Wall Street estimates, two reported results in line with consensus, and three missed it. However, regardless the results (and sales trends improving industry-wide), almost all of the stocks have underperformed the market.

The analysts think “the concerns range from relatively weak sales despite lower gas prices, harder comparisons on comps and gas prices as the year progresses, looming wage pressures and a year of outperformance, which warrants some give back.”

The Overview

The firm highlights two overviews after the earnings season.

1)   Strong results did not translate into good stock performance

2)   “Sales trends seem to be getting better, but is this enough?”

Company Specific Comments

Then, Deutsche Bank goes over its company specific comments from the earnings reports, which include:

- Advance Auto Parts, Inc. AAP – “Some signs that trends are not as bad as feared”

- AutoZone, Inc. AZO – In eight of the past nine quarters, O'Reilly Automotive Inc ORLY’s comps were better than AutoZone’s, and AutoZone’s were better than Advance Auto Parts’.

- Best Buy Co Inc BBY – The largest share gain in five years

- Home Depot Inc HD – The company is likely to continue to out-comp Lowe's...

- Lowe's Companies, Inc. LOW – ...But the latter can out-earn Home Depot

- Williams-Sonoma, Inc. WSM – “Managing to a consistent growth rate”

- Staples, Inc. SPLS – Sales are getting worse, but profits are showing signs of improvement

- Dicks Sporting Goods Inc DKS – “The drag from golf and hunt is subsiding, but a bit more patience is required.”

- Hibbett Sports, Inc. HIBB – The gross and SG&A lines continue to put pressure on margins.

- Ross Stores, Inc. ROST & TJX Companies Inc TJX – Off price in general is gaining incremental share from department stores and other apparel channels....

- Ross & TJX – “...but in the near term, department store inventories are worth watching”