4 retail trades on the radar
Keep an eye on these retailers as they report earnings this week.
By Billy Fisher
Most of the major Q4 earnings announcements are in at this point, but there are some notable retailers that will be reporting earnings in the coming days. Here are four companies we are watching at Stock Traders Daily as the week unfolds.
Home game
One of the most attractive trades I see for the coming week in the retail sector is Williams-Sonoma (WSM). The high-end home products retailer has demonstrated that it can sell even against a difficult economic backdrop. Despite flat U.S. GDP growth, analysts are predicting that the company will check in this week with Q4 EPS growth of 10.3% on a 10.2% increase in sales when compared to the prior year quarter.
The technical indicators for the company's stock have been equally impressive. The 50-day moving average has maintained a sizable gap over the 200-day moving average since breaking through in September. Traders should be able to safely bet on Williams-Sonoma going into the release given that the company has topped estimates in each of its last four quarters.
Ann (ANN) will follow Williams-Sonoma when it announces its Q4 earnings on Friday before the market open. Shares of this stock have been on a 14% slide since the beginning of the year, but a big surprise to the upside could reverse the trend. The company has beaten estimates in each of its last four quarters with three of the beats being sizable in nature. This is a seemingly low-risk trade ahead of earnings.
Fresh threads
On Wednesday prior to the market open, American Eagle Outfitters (AEO) is slated to unveil the results of its Q4. The consensus among analysts is that the apparel retailer will post a 60% year-over-year spike in earnings per share (EPS) on a 7.3% advance in total revenue.
While these fundamental gains will be welcomed by shareholders, the market has not been as enthused as the stock recently saw its 50-day moving average break below its 200-day moving average. This bearish signal has me seeing little reason to buy prior to the release, but I can see American Eagle meeting expectations or reporting a beat of a penny or two.
One other retail stock for traders to keep an eye on in the coming days is Zumiez (ZUMZ). The company is expected to announce the results of its Q4 on Friday. Although this stock has already gained 16.6% on the year, it may still have some gas left in the tank. Wall Street is calling for 23.3% improvement in EPS on a 21.5% uptick in sales versus the year-ago quarter. What's not to like with numbers like that?
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