worries about empty shelves are fading ahead of the holiday shopping season leading retail stocks higher the shift in sentiment from concern to optimism has come as retailers have reported healthierthanexpected earnings and top executives have sounded reassuring notes in quarterly earnings conference calls with wall street analysts on thursday both macys m and kohls kss reported earnings that beat consensus estimates by a wide margin in addition retailers reported being able to stockpile inventory in preparation for what some forecasts say may be the most profitable holiday season yet despite a growing focus on supply chain snarls i think people were relieved that neither macys nor kohls reported any big problems related to the shipping delays says morningstar analyst david swartz pricing has been strong so theyve been able to absorb the extra cost some items will still be out of stock but this is not entirely bad since inventories are low across the industry markdowns are low so there is higher fullprice sellthrough however many retailers that have yet to report are trading at prices above or near morningstar analysts assessments of the companies values we are possibly seeing more enthusiasm from investors than is warranted swartz says macys and kohls earnings per share are likely to be lower next year than this year the stocks have been hot throughout most of the year as the economy has reopened macys reported sales and margins that beat levels seen before the pandemic the retailer topped factset consensus estimates by over 290 and the companys stock price rallied 211 following the earnings report alongside its earnings announcement macys revealed plans to launch a digital marketplace for thirdparty brands during the second half of 2022 activist investor firm jana partners called for the company to separate on and offline operations we do not expect this will happen as macys continues to put a high value on integrating its ecommerce with its physical store base says swartz while swartz expects to raise his fair value estimate by a highsingledigit percentage the company has been overvalued for much of this year and will remain so even after the fair value increase kohls rose 101 on thursday after beating consensus estimates by 136 swartz sees shares as fully valued despite anticipating a midsingledigit raise to the companys fair value estimate bath  body works bbwi rose 53 after a 52 earnings beat we plan to bump up our 79 fair value estimate by 3 to 4 to account for recent results and cash earned since our last update but view the shares as fairly valued says morningstar senior analyst jaime katz senior analyst chelsey tam said jdcoms jd thirdquarter results appeared to be tracking ahead of 2021 assumptions the stock rose 6 after reporting earnings that were 59 above expectations jdcom is one of the few retail companies that remains undervalued following recent results trading at a 25 discount to its fair value the enthusiasm stemming from earnings reports spread to some retailers that have yet to report on thursday nordstrom jwn rose 55 gap gps rose 44 while dicks sporting goods dks and urban outfitters urbn both rose 39 rh rh trailed behind but bumped up 31 apart from rh each company is set to report earnings thanksgiving week rh will report in early december since macys beat estimates by a wide margin and the stock was up more than 20 its not surprising that investors would look for some comps that might beat earnings as well swartz says however morningstar analysts currently see many of these stocks as significantly overvalued dicks sporting goods is one of the most overvalued retailers on our coverage list trading at a 123 premium to its fair value while rh is trading at a 67 premium at recent prices urban outfitters and gap are both within fair value range nordstrom is the only company that remained undervalued following thursdays rally trading at a 15 discount below is a table that shows retail stocks covered by morningstar analysts with upcoming earnings reports