Walmart, Target, Home Depot set to report earnings this week

Yahoo Finance's Alexandra Semenova joins the Live show to discuss earnings expectations for Walmart, Target, and Home Depot.

Video transcript

- Welcome back, everyone. We've got another busy week on deck, with major retailers, including Walmart and Target, or Target, depending upon where you're from, set to report earnings. Yahoo Finance's Alexandra Semenova is here to break it all down. OK. What are we keeping an eye on in these reports?

ALEXANDRA SEMENOVA: Well, guys, the earnings season is winding down. But it's not quite over just yet. Retail is in focus this week, with reports still due out from some of the biggest consumer names. We have Walmart, Target, and the Home Depot among retail giants on the docket for earnings through Friday. And this time around investors will be looking at these companies as somewhat of a barometer for the health of the US consumer amid the sustained levels of inflation that we've been seeing.

And there are a few things when it comes to the inflation picture among corporate America, specifically among these retail giants. On one side, we could start to see inflation kind of taking a toll on consumer spending and consumer attitudes. But on the other hand, this gives companies more pricing power, which is a good thing for their balance sheets. We're going to see that with Walmart, the largest US retailer. Analysts are expecting inflation was a tailwind for the megastore last quarter because of that pricing power. However, the company will face some tough year over year comparisons. You have last year's fiscal stimulus winding down.

You have a slowdown in pandemic e-commerce spending, and of course, the broader economic headwinds. Analysts are looking for adjusted earnings of $1.48 per share on revenue of about $139 billion for Walmart, which would mark a 12% drop in EPS and a 1% increase in revenue. But important to note that Walmart has actually beat consensus estimates for the last four quarters. And it's really been a consistent stock, up about 2% this year compared to the broader S&P.

- Really, the part of the week is in fact Walmart. And two things, you mentioned one too, inventory a big focus there. So you mentioned that in our morning meeting. One for me is, how did the same-store sales do for Walmart in the first quarter compared to, really, the past four quarters here? Was that low-income consumer-- were they able to navigate these inflationary periods and still shop at Walmart? Or did they just not buy some of these items?

ALEXANDRA SEMENOVA: Well, that's definitely going to be a key focus among stock watchers this time around. We're still expecting an increase in sales for Walmart. But we're going to see a difference when it comes specifically to the in-store sales versus the e-commerce spending. That's expected to slow down significantly from last year.

But so far, we haven't seen much of a toll of inflation in companies reporting results. We're expected to see that, really, in the coming quarters more meaningfully. An interesting stat actually from FactSet here. Of the 445 companies in the S&P 500 that have reported earnings so far, 377 have mentioned inflation. So the coming quarters will be a big, big thing to watch.

- Yeah, definitely. And Walmart sort of historically and in recent quarters has held prices down and kind of absorbed that gross margin. But we'll see how--

- Save money. Live better. That's their tagline.

- --how long they are willing to do that. Thanks so much, Alexandra. Appreciate it.