The three major U.S. equity indexes closed higher Tuesday. The Dow Jones industrials ended the day up 0.17%, the S&P 500 closed 0.87% higher and the Nasdaq saw a gain of 1.45%. Nine of 11 sectors closed higher, with communications services up 1.78% and three others (consumer cyclicals, technology and real estate) adding 1.24%. Materials (−0.11%) and health care (−0.07%) lagged.

The monthly report on retail sales came in much hotter than expected, posting its largest gain since February. Overall sales rose 1.3% month over month and increased 0.9% excluding automobiles and gasoline. Thursday and Friday bring data related to new home construction and existing home sales in October. The weekly report on jobless claims is also due Thursday.

The three major indexes opened mixed on Wednesday. The Dow was up, while the S&P 500 and the Nasdaq composite were lower.

Before U.S. markets opened on Wednesday, Target missed consensus estimates for both earnings per share (EPS) and revenue. The company also lowered its fiscal 2022 outlook for both same-store sales and operating margin. Shares traded down about 14.5% in the first hour of regular trading Wednesday.

Lowe’s reported profit and revenue above consensus estimates. Third-quarter same-store sales were up 2.2% year over year and 3.0% in the United States. Lowe’s raised fiscal 2023 guidance above analysts’ consensus. Shares traded up about 4.3% early Wednesday.

TJX Companies reported mixed results, beating the EPS estimate but missing on revenue. EPS guidance was lowered from a prior range of $3.07 to $3.11 to a new range of $2.93 to $2.97. Shares traded up about 1% Wednesday morning.

Zim Integrated Shipping beat consensus estimates on both the top and bottom lines. Shares traded up 1.5% in Wednesday’s regular session.

Cisco Systems and Nvidia will post results after markets close Wednesday, and before they open again on Thursday, look for Alibaba, Kohl’s, Macy’s and NetEase to report earnings. On deck later on Thursday are Applied Materials, Gap, Palo Alto Networks and Ross Stores.

Here is a look at two companies expected to report results first thing Friday morning.

Foot Locker

Shares of Foot Locker Inc. (NYSE: FL) dropped by nearly 6% following the company’s decision to remove Kanye West’s Yeezy brand following the rapper’s antisemitic comments late last month. Adidas, which had a lucrative partnership deal with Ye, as West is now known, junked its partnership deal worth an estimated $1.5 billion. Foot Locker has had a tough year regardless, dropping nearly 44% from its share price. On Tuesday, the company announced that it is expanding its partnership with Puma, emphasizing basketball shoes and gear.
Of 19 analysts covering Foot Locker, 18 have moved to the sidelines with a Hold rating. Only one has a Buy rating. At a recent price of around $32.00 a share, the implied gain based on a median price target of $37.00 is 13.5%. At the high price target of $47.00, the upside potential is 27%.

Fiscal 2023 third-quarter revenue is forecast at $2.1 billion, which would be up 1.8% sequentially but down 4.1% year over year. Adjusted EPS are forecast at $1.12, up 2.1% sequentially and down 42.0% year over year. For the full fiscal year ending in January, Foot Locker is currently expected to report EPS of $4.27, down 45%, on revenue of $8.32 billion, down 7.1%.

Shares trade at 7.4 times expected 2023 EPS, 8.0 times estimated 2024 earnings of $3.96 and 7.6 times estimated 2025 earnings of $4.20 per share. Foot Locker’s 52-week trading range is $23.85 to $57.56.The company pays an annual dividend of $1.60 (yield of 4.73%). Total shareholder return for the past year was negative 40.6%.

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JD.com

Beijing-based JD.com Inc. (NASDAQ: JD) is China’s second-largest e-commerce company. Shares have plunged nearly 38% over the past 12 months. The company expects to win regulatory approval from China for a Hong Kong IPO of its JD Tech subsidiary after failing in an earlier attempt this year. This week, Ant Group’s consumer finance unit doubled its registered capital in an effort to clear the way for its own IPO. The Chinese government’s crackdown on big tech firms apparently has been eased somewhat by the country’s faltering economic growth.

Of 38 analysts covering the stock, 36 have a Buy or Strong Buy rating. At a share price of around $53.25, the stock’s implied upside based on a median price target of $78.93 is about 48.2%. At the high price target of $115.58, the upside potential is 117%.

Analysts expect JD.com to report third-quarter revenue of $34.45 billion, down 13.7% sequentially but 1.6% higher year over year. Adjusted EPS are expected to come in at $0.63, up 4.6% sequentially and by 28.6% year over year. For the full 2022 fiscal year, EPS is forecast at $2.08, up 23.2%, on sales of $1550.38 billion, up 0.4% year over year.

JD.com stock trades at 25.5 times expected 2022 EPS, 19.0 times estimated 2023 earnings of $2.80 and 14.8 times estimated 2024 earnings of $3.59 per share. The stock’s 52-week range is $33.17 to $92.69, and the company does not pay a dividend. Total shareholder return over the past year is negative 36.5%.

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