Stock analysts have really gotten down on a lot of major retailers lately. Wells Fargo recently looked at how 2015 consensus earnings estimates have changed over the past two years. Among the 51 retailers Wells Fargo looked at, estimates declined for 42 of them. Three companies — Shutterfly, Aeropostale, and J. C. Penney — saw declines in earnings estimates of more than 100 percent.
Even though the earnings expectation were down sharply, the retailers’ stocks did well. The average share price among the sample increased by 46 percent, and only 13 of the 51 share prices declined. So the analysts' pessimism didn't hurt shareholders in the long run.
That result seems counterintuitive, but it's not uncommon. Wells Fargo also found that consensus estimates dropped for 21 of the 30 companies in the Dow over the same period — but those stocks gained 43 percent on average.
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