Although we don’t believe in timing the market or panicking over market movements, we do like to keep an eye on big changes — just in case they’re material to our investing thesis.
Earnings season may be winding down, but a few top-notch earnings reports took center stage today and helped the broad-based S&P 500 break out of its four-day losing streak.
Retailers were a big reason why the S&P 500 was able to stave off what’s been a steady downtrend over the past two weeks. The Home Depot, Inc. (NYSE:HD) was certainly one of the more instrumental retailers in giving both the S&P 500 and Dow Jones Industrial Average (Dow Jones Indices:.DJI) a boost. The Home Depot, Inc. (NYSE:HD) delivered a 17% increase in its net income on a blistering 10.7% increase in same-store sales in the second quarter as low lending rates and holiday events fueled homebuilding and improvement activity. As long as lending rates remain low, The Home Depot, Inc. (NYSE:HD) is likely to be a big beneficiary and calming influence on the markets.
Leading all performers today with a gain of 13.2% was electronic big-box retailer Best Buy Co., Inc. (NYSE:BBY). The reason behind the move was a big earnings beat and marginal revenue outperformance relative to estimates. For the quarter, revenue moved lower by 0.4% to $9.3 billion as comparable-store sales fell 0.6%, but EPS rose by a factor of seven to $0.32 from $0.04 in the year-ago period and well ahead of the $0.12 the Street was looking for. Simply put, the Best Buy Co., Inc. (NYSE:BBY) turnaround is working as I suspected it would all along. As long as the company continues to rein in costs, focus on its direct-to-consumer products, and sticks with price-matching its competition, it should remain in good shape.
Shares of clothing and accessories retailer Urban Outfitters, Inc. (NASDAQ:URBN) also strutted down the catwalk with an 8.2% gain after market-topping second-quarter earnings results. For the quarter, Urban Outfitters, Inc. (NASDAQ:URBN) delivered a 9% increase in comparable-store sales as revenue rose 12% to $759 million and net income jumped 25% to $0.51 per share. The Street expected a more modest $0.48-per-share profit from Urban Outfitters, Inc. (NASDAQ:URBN). Earnings beats have become quite common for the teen and young adult-focused retailer, but at 20 times forward earnings, it’s no longer the screaming value that it once was.
Finally — and to keep the theme of retailers alive and well today — The TJX Companies, Inc. (NYSE:TJX), the parent of TJ Maxx and Marshalls, added 6.9% after also reporting stellar second-quarter earnings results. The TJX Companies, Inc. (NYSE:TJX) delivered 8% net sales growth during the quarter to $6.4 billion with an equally impressive 4% increase in comparable-store sales growth (no easy figure in this spending environment). Profit for the quarter rose to an adjusted $0.66 per share over the year-ago period and easily ran past the $0.63 in EPS analysts expected. Furthermore, The TJX Companies, Inc. (NYSE:TJX) slightly boosted its full-year EPS outlook to a range of $2.74-$2.80 from prior guidance of $2.70-$2.78. As I mentioned this weekend, I fully expect The TJX Companies, Inc. (NYSE:TJX) to clean up this back-to-school shopping season.
The article Today’s 3 Best Stocks originally appeared on Fool.com and is written by Sean Williams.
Fool contributor Sean Williams has no material interest in any companies mentioned in this article. You can follow him on CAPS under the screen name TMFUltraLong, track every pick he makes under the screen name TrackUltraLong, and check him out on Twitter, where he goes by the handle @TMFUltraLong.The Motley Fool recommends Home Depot and Urban Outfitters.
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