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The Week Ahead: Walmart, Home Depot, and Target Report

Big companies in the consumer cyclical and consumer defensive sectors, as well as a big name in technology, are on our radar.

May’s earnings season is picking back up, and we are expecting reports from Walmart WMT on Tuesday, followed by Home Depot HD and Target TGT on Wednesday, and Nvidia NVDA on Thursday.

As a well-established brand with a growing impact on the e-commerce platform, we believe Walmart is the only American retailer fit to compete with AMZN, a company that has disrupted the cutthroat retail environment with its broad scope and distribution. Walmart is also a fit competitor against the coronavirus. As the pandemic continues to leave economic destruction in its wake, we do not expect Walmart’s standing to be shaken for the long term. With the support of its booming grocery offering as well as its status as the most-valuable outlet for leading manufacturers in terms of dollar sales, we predict Walmart will continue to be the dominant traditional retailer.

As with Walmart, we do not anticipate the coronavirus will have a long-term effect on Target’s competitive standing. Since April, the company’s sales performance has diverged, with sales in essentials and groceries increasing, and sales in apparel and accessories decreasing. Although Target is thrown in the ring with Amazon and Walmart, the two reigning leaders of retail, we believe this iconic brand can withstand coronavirus.

Built on a strong foundation of customer service, knowledge, and innovation, Home Depot is the world’s largest home improvement retailer. The company solidifies customer loyalty by passing along a portion of savings to consumers with lower everyday pricing. This, along with benefits from the housing market and improvements on its merchandising and distribution network, makes Home Depot a secure, familiar brand in the consumer cyclical sector.

For Nvidia, the leading designer of graphics processing units, inventories have normalized since the cryptocurrency-related headwinds in early 2019. We expect the firm’s growth to stem from its high-end discrete GPUs. These GPUs are used by PC gaming enthusiasts and consumers in the data center segment, which is led by the explosive artificial intelligence phenomenon.

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