Walmart (WMT), Home Depot (HD) beat estimates in third quarter

Highlights

• Walmart Inc.'s (NYSE: WMT) revenue increased 4.3% YoY to US$140.5 billion. It raised the full-year adjusted EPS guidance to around US$6.40.
• Home Depot, Inc. (NYSE: HD) reported net sales of US$36.8 billion, up 9.8% YoY in Q3, 2021.
• Walmart’s consolidated operating income rose 0.2% YoY to US$5.8 billion, while Home Depot’s operating income increased 19.4% YoY to US$5,795 million in the quarter.

Retailers Walmart Inc (NYSE: WMT) and Home Depot Inc (NYSE: HD) reported robust third-quarter results before the opening bell on Tuesday.

The WMT stock was up 1.69% to US$149.40, while the HD stock rose 0.64% to US$373.44 in the premarket session at 7:08 am ET on Tuesday.

Walmart Inc. 

Walmart’s revenue grew 4.3% YoY to US$140.5 billion. Its US comparable sales were up 9.2% in the quarter and grew 15.6% on a two-year basis. The Comp transactions increased by 5.7%. 

It also said that its US inventory jumped 11.5% ahead of the holidays. Sam's Club comparable sales grew 13.9% and 25% on a two-year basis. The total e-commerce sales grew 32% YoY. 

Walmart International's net sales decreased 20.1% to US$23.6 billion due to divestitures.

The consolidated operating income for the quarter was US$5.8 billion, up 0.2% YoY. The GAAP EPS was US$1.11, and the adjusted EPS was US$1.45.

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Fiscal 2022 Guidance

The company expects the full-year US comparable sales, excluding fuel, to be more than 6%.

The full-year GAAP EPS is expected to be around US$5.00. The adjusted EPS is to be around US$6.40 compared to the earlier guidance of US$6.20 to US$6.35. 

In addition, the capital expenditures are expected to be about US$13 billion for FY 2022.

Walmart Inc. is one of the world's leading retailers based in Bentonville, Arkansas. It provides a range of grocery items and general merchandise. Some 220 million customers in 24 countries visit its 10,500 stores, clubs, and e-commerce website weekly. 

Walmart’s current market cap is US$409.65 billion, and its P/E ratio is 41.38. WMT has a dividend yield of 1.49%, with an annualized dividend of US$2.20.

It has around 2.2 million associates globally. The stock closed at US$146.91 on Nov 15, 2021.

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Home Depot, Inc. (NYSE: HD) 

Home Depot’s net sales jumped 9.8% YoY to US$36.8 billion in Q3, 2021, compared to US$33.5 billion in the third quarter of 2020. Its comparable sales in the US increased 5.5% YoY.

The company’s operating income was US$5,795 million, up 19.4% from the previous year.

The net earnings were US$4.13 billion, or US$3.92 per share diluted for the quarter, compared to net earnings of US$3.4 billion, or US$3.18 per share diluted in the corresponding quarter of the previous year. Its diluted earnings per share increased around 23.3% YoY.

The Georgia, Atlanta-based home improvement specialty retailer had 2,317 stores in 50 states at the end of Q3, 2021. It employs nearly 500,000 associates. 

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Home Depot offers its products through warehouse-format stores. Currently, it has over 30,000 products in stores and more than one million products online.

Its market cap is US$391.6 billion, the P/E ratio is 26.1, the dividend yield is 1.77%, and the annualized dividend is US$6.60. The stock closed at US$371.08 on Nov 15, 2021.  

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Bottomline

The US retail sector is upbeat over the prospect of strong sales during the holiday season. While the retailers have seen sound sales growth in the latest quarters, they hope the holiday sales season will help cement their gains for the year. However, investors must evaluate the companies carefully before investing in the stock market.