Walmart and Home Depot Report Q2 Earnings Beats

Q2 Walmart Earnings: Top and Bottom Line Beat, Guidance Reiterated, Stock Trading Higher

• WMT EPS: $1.77 adjusted vs. $1.62 expected
• WMT Revenue: $152.86B vs. $150.81B expected
• WMT Net quarterly income: $5.15B vs. $4.28B last quarter
• WMT Same-store sales: +6.5% YoY vs. 5.9% expected
• WMT E-Commerce sales: +12% YoY, +18% on a 2Y basis
• WMT Guidance: Reiterated — Expected EPS decline of 9%-11% for the full year
• Sam’s Club same-store sales: +9.5% vs. 10.1% expected
• Sam’s Club memberships: All time high this quarter.
• WMT shares are up over 4% in the premarket — $138.10 at the time of writing

Walmart’s CFO Jon David Rainey said that cracks in consumer-strength are beginning to show. Credit-to-debit ratio is increasing. Low-income consumers are buying smaller sizes of the items they need — particularly in the food segment, where more shoppers are buying items like “canned tuna and beans” instead of “deli meats and beef”. 

Despite that, Walmart was still able to turn a profit this quarter, beating earnings on the top and bottom line with the help of inflation — which is giving the discount retailer the ability to raise their prices, and subsequently their margins. Walmart was also assisted by a boost from middle-to-high income shoppers, who visited Walmart at a higher-rate than in previous quarters. 

Walmart shares are down roughly 8% on the year, however this earnings pump (if it sticks) could help the stock erase some of those losses. 

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Q2 Home Depot Earnings: Top and Bottom Line Beat, Guidance Raised, Stock Trading Lower

• HD EPS: $5.05 vs. $4.94 expected (+11.5% YoY)
• HD Revenue: $43.8B vs. $41.12B expected (+6% YoY)
• HD Same-store sales +5.8% YoY vs. 2.8% expected
• HD Guidance: “Mid single digit” earnings growth, up from “low single digit” growth expected in prior forecast
  • Operating margins expected at 15.4%, comparable sales growth of 3%
• HD shares are lower by 1.31% in the premarket — $310.50 at the time of writing

Home Depot’s CEO Ted Decker delivered the highest quarterly sales and earnings in company history. Despite Home Depot’s consistent positive performance, the stock is down 23.01% for the year — underperforming the S&P 500 by 12.78%. That trend is set to continue if Home Depot remains lower upon market open.

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