Wal-Mart and Kohl's Head in Opposite Directions

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Although we don't believe in timing the market or panicking over daily movements, we do like to keep an eye on market changes -- just in case they're material to our investing thesis.

The major indexes just won't stop climbing higher and look to again set record highs today. As of 1:05 p.m. EST the Dow Jones Industrial Average  (DJINDICES: ^DJI  ) is up 42 points, or 0.25%, to 15,861, while the S&P 500 has risen 0.35%, and the Nasdaq is flat. Both the Dow and the S&P have hit new intraday highs, and if they close at their current levels they would set fresh records.

A few winners and losers
The Dow's retail king, Wal-Mart (NYSE: WMT  ) is moving higher today after reporting quarterly earnings this morning. The company just missed revenue expectations of $116.8 billion by posting $115.69 billion but did beat earnings-per-share estimates by $0.01 after posting profit of $1.14. For the following quarter, the company is forecasting profit of $1.60-$1.70 per share and a full year-estimate of $5.11-$5.21, lower than the previously stated $5.10-$5.30 per share. Although shares opened this morning in the red, they have fought back and are now up by 0.19%. 

Another retailer to report this morning was Kohl's (NYSE: KSS  ) which isn't doing quite as well as Wal-Mart this afternoon. Shares are down 7.35% after the company reported a 1.6% drop in same-store sales. Net income fell 18%; earnings per share came in at $0.81 even though the company's own guidance was $0.83-$0.92 and analysts had been looking for EPS of $0.86. Furthermore, the company cut its full-year guidance from $4.15-$4.35 to $4.08-$4.23 per share. Things are beginning to look bad for the retailer, and investors may want to consider whether it is worth sticking out another quarter or cutting ties now.  

Another loser today is lululemon  (NASDAQ: LULU  ) , which is down 3.9% after an analyst at Sterne, Agee & Leach cut the stock's rating from neutral to underperform and slapped a $56 price target on it. Analyst Sam Poser noted recent comments from Chairman chip Wilson, who said that some women's bodies don't work for the pants and areas that experience constant rubbing will experience piling over time. Poser said he believes the company's core customers have been alienated by these comments and will begin shopping with the competition, as there are many options within the active-wear segment. What's odd is that just yesterday the stock was up more than 4% after an analyst at JPMorgan Chase upgraded it, arguing that revenue and profit will begin to accelerate in the near future. I will repeat what I stated yesterday: Investors should know that this is a volatile stock and not for the faint of heart.  

Who Will Rule Retail?
To learn about two retailers with especially good prospects, take a look at The Motley Fool's special free report: "The Death of Wal-Mart: The Real Cash Kings Changing the Face of Retail." In it, you'll see how these two cash kings are able to consistently outperform and how they're planning to ride the waves of retail's changing tide. You can access it by clicking here.

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updated 21 hours ago Sponsored by:
DOW 18,308.15 164.70 0.91%
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Related Tickers

9/30/2016 5:01 PM
^DJI $18308.15 Up +164.70 +0.91%
KSS $43.75 Up +0.95 +2.22%
Kohl's CAPS Rating: **
LULU $60.98 Down -0.01 -0.02%
Lululemon Athletic… CAPS Rating: ***
WMT $72.12 Up +1.39 +1.97%
Wal-Mart Stores CAPS Rating: ***