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Commentary

The Week Ahead: Earnings From Home Depot, Target, Salesforce, and More

Consumer retail and software companies report earnings next week.

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Earnings season is slowing, but reports are due from several consumer retail, software, and manufacturing companies.

We're watching for Home Depot (HD), Lowe's (LOW), Best Buy (BBY), Ross Stores (ROST), TJX Companies (TJX), and Target (TGT). Although digital competition has become fierce and some brick-and-mortar retail stores are shutting down, our analysts view home improvement stores as being well protected in this environment as product characteristics and customer demand for services are best delivered in-store. This leaves Home Depot in good position within the changing retail environment. Our analysts believe some risk still lies in competition from the e-commerce channel, but that new players would be hard-pressed to offer similar prices and would lack the established vendor relationships of Home Depot.

Salesforce (CRM) is releasing earnings Wednesday. As the original salesforce automation company, Salesforce retains its wide Morningstar Economic Moat Rating, and despite the share-price decline in June after its acquisition of Tableau, our analysts view shares as undervalued and maintain their $186 fair value estimate.

We are also watching for Agilent Technologies (A) on Monday. In the previous quarter, Agilent generated $1.3 billion in sales, with its widest moat segment for biopharmaceutical firms growing 13%, up from 2% in the second financial quarter.

In economic news, various housing reports, such as existing home sales for October and the Mortgage Applications Index, will be released next week. We will also see the minutes from the Federal Open Market Committee meeting.

Charlotte Frank has a position in the following securities mentioned above: A. Find out about Morningstar’s editorial policies.