Wells Fargo issued a cheat sheet for hardlines stocks into the Q3 earnings season.
The firm said it sees lower risk in general because second-half outlooks are now more appropriately calibrated to match today's economic reality. In particular, the categories of auto parts, home improvement, and pet spending are seen holding up - while discretionary categories such as furnishings and electronics appear to be more vulnerable to promotional activity if demand form low-income consumers fades.
In terms of the margin lines, supply chain costs are noted to be moderating including with container rates, port fees, commodity prices & domestic trucking, but company and industry-specific factors like freight contracts could make results choppy across hardlines.
Wells Fargo said its recent channel checks look solid for O'Reilly Automotive ( NASDAQ: ORLY ), AutoZone ( AZO ), Tractor Supply ( TSCO ), Home Depot ( HD ), Lowe's ( LOW ), and Floor & Decor ( FND ) - while the firm has some concerns on Bed Bath & Beyond ( BBBY ), Wayfair ( W ), and JOANN ( JOAN ).
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AutoZone, Home Depot and Tractor Supply tipped for solid earnings by Wells Fargo