Five key US earnings to explore from this week

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Highlights:

  • Walmart Inc. (WMT) expects its Q4 FY22 net sales to increase around three per cent YoY.
  • Home Depot's Net sales (HD) surged over five per cent YoY in Q3 FY22.
  • Alibaba Group Holding's revenue surged three per cent YoY in the September quarter.

The US market has been highly volatile lately throughout the year, with a flurry of economic headwinds weighing on the investors' sentiments. However, the investors appear to have shifted their focus to the latest quarter earnings season for cues on the companies' performance.

The market participants have kept a distance from the risk-bet assets recently due to the higher inflation and the central bank's hawkish move to tame it. Although the latest government data suggested that the inflation has cooled off lately, the latest hawkish comments from the Fed officials have dampened the optimism in the market.

The policymakers suggested that even though the inflation seems to be cooling, the central bank might keep raising the interest rates. Some policymakers suggested that they might slow down their pace of raising the borrowing costs, but a pause in the hikes might not be possible in recent months.

However, investors are keeping a close watch on the earnings season for cues on the economic impact on corporate profits. Some of the prominent players to report this week includes Walmart Inc. (NYSE: WMT), Home Depot, Inc. (NYSE: HD), NVIDIA Corporation (NASDAQ: NVDA), Lowe's Companies, Inc. (NYSE: LOW), and Alibaba Group Holding Limited (NYSE: BABA).

Here we explore the recent stock performance and earnings highlights of these companies for further insights into the companies' performance in recent days.

Walmart Inc. (NYSE: WMT)

The leading retail company, Walmart's dividend yield is 1.52 per cent. The retail store chain operator is well known for its hypermarkets, discount department, and other related grocery stores.

The US$ 401.70 billion market cap firm said its revenue surged 8.7 per cent on a reported basis to US$ 152.8 billion in the quarter, and on a constant currency basis, it rose 9.8 per cent YoY to US$ 154.3 billion.

The Bentonville, Arkansas-based discount store operator's operating income slumped 53.5 per cent YoY to US$ 2.7 billion in Q3 FY22.

The company expects its final quarter net sales to increase about three per cent YoY, while for its annual guidance, it estimates the growth to be about 5.5 per cent YoY.

Home Depot, Inc. (NYSE: HD)

The leading home improvement firm, Home Depot, holds a dividend yield of 2.44 per cent. The company's stock, which sells tools, construction products, and other related items, fell nearly 25 per cent YTD and about 21 per cent YoY.

However, in the current quarter through November 18, it gained over 12 per cent. The US$ 322.38 billion market cap retailer declared a third-quarter cash dividend of US$ 1.9 apiece on November 17, which would be payable on December 15, 2022.

Home Depot Inc's sales increased by 5.6 per cent, from Q3 FY21 to US$ 38.9 billion in Q3 FY22, and its net earnings totaled US$ 4.3 billion, against US$ 4.1 billion in the year-ago period.

The diluted EPS of the home improvement retailer rose by 8.2 per cent YoY to US$ 4.24 apiece in the quarter.

NVIDIA Corporation (NASDAQ: NVDA)

The leading semiconductor firm has reported its earnings this week. The company manufactures GPUs for different markets and has its operations globally.

Meanwhile, like most of the technology growth stocks, the chipmaker's stock has also witnessed choppy trading so far this year, losing over 46 per cent YTD. In the running week, it plummeted nearly four per cent through November 18.

However, the NVDA stock closed at about 45 per cent higher on November 17, from its 52-week low of US$ 108.13 noted on October 13.

The Santa Clara, California-based leading technology company's revenue decreased by 17 per cent YoY to US$ 5.93 billion in Q3 FY23. Meanwhile its data center revenue surged 31 per cent YoY to US$ 3.83 billion. NVIDIA Corporation's GAAP diluted EPS slumped 72 per cent YoY to US$ 0.27 apiece in the quarter.

Lowe's Companies, Inc. (NYSE: LOW)

Lowe's Companies also reported its latest quarter earnings results this week. The retail store chain operator lost about 19 per cent YTD and around 15 per cent YoY from its stock price.

The company’s sales were US$ 23.5 billion in Q3 FY22, against US$ 22.9 billion in Q3 FY21, and its comparable sales rose 2.2 per cent YoY. Meanwhile, the company's comparable sales for the US home improvement operations increased by three per cent YoY in the quarter.

As of October 28 this year, the company said it had operated 1,969 home improvement and hardware stores in the US and Canada. Lowe's Companies' net earnings were US$ 154 million in Q3 FY22, down from US$ 1.89 billion in Q3 FY21.

For fiscal 2022, the home improvement retailer expects its sales to reach between US$ 97 billion and US$ 98 billion, including the 53rd week. For the final week, it estimates its sales to increase by around US$ 1 billion to US$ 1.5 billion.

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Alibaba Group Holding Limited (NYSE: BABA)

The Chinese e-commerce giant Alibaba Group Holding announced its September quarter earnings results on November 17.

The Hangzhou, China-based e-commerce company's revenue soared three per cent YoY to RMB 207.17 billion or US$ 29.12 billion, and its diluted loss per ADS totaled RMB 7.77 apiece or US$ 1.09 per share.

Bottom line:

The week marked an important period for Wall Street traders. After a week of debates over the midterm polls, the Republicans gained control over the House with a narrow victory, which has lifted some investors' spirits.

The GOP victory over the House has spurred chances over political gridlock. The split government, which generally causes a political gridlock, often benefits the broader market's performance.

The earnings season seemed to have lifted the investors' spirits so far, with some big companies reporting gloomy results for the quarter. Investors have lauded the downbeat earnings, as it showed that the Fed's measures have affected corporate profits.

But, considering the performance of the major indices, with S&P 500 index losing over 17 per cent YTD and around 15 per cent YoY, investors should consider all the risks before considering any investment.



 


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