There are very clear winners and losers emerging as retail earnings reports continue to shed light on the sector.
Wal-Mart is the clear disappointment, down nearly 3 percent to a new 52-week low, the only company at a new low at the open. Shares are down 18 percent year to date.
The focus has been on Wal-Mart's lower guidance for the year, but the company highlighted many positives:
And if you read the report carefully there are several reasons guidance has been lowered, only a couple due to lower sales:
See that word "investment." Many Wal-Mart stores today are cleaner and crisper, and the groceries look better than they have in years. And the company is finally starting to pay its people more. It is investing in its businesses.
The question is, does the consumer have the money to buy more and pay more? We know people are buying more cars, paying for Netflix subscriptions, and even spending more on restaurants. Will there be enough left over to move the needle for a Wal-Mart?
Wal-Mart's biggest problem is that, partly due to its size, it is having trouble growing revenues, shown by the figures below:
Wal-Mart Revenues (billions, source: FactSet):
That's a little more than 3 percent annual revenue growth, well behind the competition below.
5-year annual revenue growth:
That low growth rate is one reason Wal-Mart trades at a relatively low multiple of 15 times forward earnings, as opposed to TJX and Home Depot, both of which trade at multiples of roughly 23 times forward earnings.