Stock Market Today: Retail Stocks on Sale After Earnings

Another day, another all-time high. However, we’re not seeing the euphoric upside rallies that some investors associate with new highs. In fact, it was a very choppy and for the most part, uneventful session in the stock market today.

Stock Market Today

The SPDR S&P 500 ETF (NYSEARCA:SPY) spent most of the session within a few basis points of break-even, while the Nasdaq Composite did slightly better and the Dow Jones Industrial Average slightly worse.

For the most part, it was a quiet day. But the analysts and the retail sector made some noise.

Retail Roundup

Oof. It was not a good showing from the retail world. That will likely give pause to the bulls who were looking forward to some nice upside reactions throughout the week.

Home Depot (NYSE:HD), perhaps one of the most consistent retailers, whiffed on its third-quarter report. Earnings of $2.53 per share were in line with expectations, while revenue of $27.2 billion missed expectations by roughly $300 million. Comparable-store sales growth missed too, while management lowered its full-year outlook for revenue and comparable-store sales.

Kohl’s (NYSE:KSS) took it a step further, though. While revenue of $4.6 billion beat estimates by $230 million, sales growth was flat year-over-year. Further, earnings of 74 cents per share missed analysts’ expectations, while management significantly reduced its full-year guidance. The company now expects earnings in the range of $4.75 to $4.95 per share against a prior outlook of $5.15 to $5.45 per share and a consensus estimate of $5.19 per share.

To top it all off, KSS missed on comp-store sales too, growing just 0.4% against expectations for 0.8%. Gross margins came up short as well. No wonder shares fell roughly 20% Tuesday.

Given that Macy’s (NYSE:M) stock fell more than 10% on the day, many investors likely assumed the company missed on earnings. That’s not the case, as Macy’s reports on Thursday. Instead, the company disclosed a data breach. According to Macy’s, it only impacted a small number of customers over a one-week span, but it’s not a good headline to have in the news.

TJX Companies (NYSE:TJX) was one of the few bright spots Tuesday, if you want to call it that. Shares ended higher by less than 3% despite a pretty solid report. Earnings of 68 cents per share beat estimates by 2 cents, while revenue of $10.5 billion grew 6.3% year-over-year and topped expectations by $140 million.

Comp-store sales growth of 4% easily topped estimates of 2.3% growth. So why isn’t the stock up more? While its peers aren’t doing TJX any favors, consider the guidance. Management’s full-year earnings outlook range of $2.61 to $2.63 per share was slightly ahead of the $2.61 consensus. However, TJX’s Q4 earnings outlook of 74 cents to 76 cents per share came up short of expectations at 77 cents per share.

In other words, the full-year outlook is slightly ahead of estimates because of Q3, not the current Q4 results.

Movers in the Stock Market Today

AT&T (NYSE:T) stock slumped over 5.5% at one point on Tuesday. After hitting new 52-week highs on Monday, one would think the market was really pulling back in order for this to happen.

Instead, it was a downgrade. The stock was downgraded to “sell” at MoffettNathanson, as the analysts assigned a $30 price target. The analyst makes his case based on valuation and deteriorating fundamentals. At 11 times earnings with a 5.1% dividend yield, many investors may not see it that way, though.

AT&T, Home Depot, Macy’s and TJX were all picks for InvestorPlace’s Top Stock Trades column on Tuesday.

On the other end of the spectrum was Broadcom (NASDAQ:AVGO). Shares rocketed over $325 in the opening minutes of Tuesday’s session, a rally that was sparked by Morgan Stanley analysts. They upgraded the stock to an “overweight” rating and labeled it a top pick, assigning a $387 price. While AVGO hit new 52-week highs on the move, it could not maintain those highs, closing at just $317.70.

Despite its recent woes, Boeing (NYSE:BA) is still grabbing a few new orders. Its troubled 737 MAX jet — the one that is currently grounded worldwide — received 50 orders for the jet at the Dubai Air Show.

Slack (NYSE:WORK) took it on the chin Tuesday, falling almost 9%. The decline comes after Microsoft (NASDAQ:MSFT) has grown its Teams platform from 13 million daily active users (DAUs) in July to 20 million at last check. For reference, Slack had 12 million DAUs as of last month.

Bret Kenwell is the manager and author of Future Blue Chips and is on Twitter @BretKenwell. As of this writing, Bret Kenwell is long T and AVGO.

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