Wednesday's Headlines: Home Depot Remains Strong

Wednesday's Headlines: Home Depot Remains Strong

Here were the biggest movers in the MyWallSt shortlist yesterday:

Moving Up ⬆️

Stitch Fix (SFIX) +20.2%

Upstart Holdings (UPST) +9.7%

Nordstrom (JWN) +7.6%

Take-Two Interactive (TTWO) +7.2%

Nautilus (NLS) +6.6%

Moving Down ⬇️

Sea Limited (SE) -13.9%

Wix (WIX) -4.0%

Teladoc (TDOC) -3.6%

Zoom Communications (ZM) -3.6%

2U (TWOU) -3.5%

Here are the stories that you need to know ahead of market-open today, Wednesday the 17th of August.

Home Depot Remains Strong 💪

Home Depot (HD) gained on Tuesday after a surprise second-quarter earnings beat that has helped quell inflation fears. The home improvement store brought in revenue of $43.8 billion, beating analysts’ forecasts of $43.36 billion, while earnings per share were a healthy $5.05 vs $4.94 expected.

Digging a little deeper, all of Home Depot’s key performance indicators remain strong. Same-store sales rose 5.8%, average ticket value grew by 9%, and sales per retail square foot grew 5.7%. Management stated that total customer transactions did slip during the quarter but believe this was caused by contractors making fewer visits but spending more. However, some of the spending spike can also be attributed to inflation.

In typical Home Depot fashion, it would appear that while macroeconomic conditions are tough, people find ways to improve their current home rather than looking for a new one. According to Jeff Kinnaird, executive vice president of merchandising, sales were driven by both pro and DIY customers.

All in all, the quarter allowed Home Depot to reaffirm its forecast for the fiscal year. Management expects sales to slow in the second half of the year and predicts comparable sales will grow 3% for 2022.

Home Depot’s stock was up 4% on Tuesday.

Walmart Strikes a Win For Retail 🔥

Walmart successfully navigated a tricky quarter to produce top and bottom line beats yesterday in its second-quarter earnings call. The big-box retailer also stood by its previous guidance for the remainder of the year, buoying the retail industry as a whole.

Walmart reported adjusted earnings per share of $1.77 on revenue of $152.86 million, outpacing analyst estimates of $1.62 per share and $150.81 million, respectively. Rising inflation certainly aided these figures, as prices for certain items continued to climb, but Walmart also benefitted from a rethinking in shopping habits from middle and high-income shoppers. Its reputation as a discount and budget-friendly store has driven these shoppers through its doors as they search for any way to save money in today’s difficult macro environment.

Walmart stock rose by over 5% yesterday on the back of this positive report, and it also had a ripple effect across the entire retail industry. Walmart is often seen as a bellwether for the wider economy, so increasing revenue and a reinforced commitment to its previous guidance sent other stocks such as Target skyward too.

Despite being down over 12% from all-time highs, Walmart is actually holding its value relatively well this year compared to many other companies. Essential retail is a sector that typically defies recessionary fears as consumers will always need to buy necessities. However, Walmart is not totally immune to a harshening macro environment and, as such, will continue to cut costs where it can.

Musk Jokes About Buying Manchester United ⚽️

Yesterday evening Elon Musk tweeted he was buying Manchester United Plc. When asked by a Tesla (TSLA) fan club account if he was serious, he responded with:

“No, this is a long-running joke on Twitter. I’m not buying any sports teams.”

The response came four and a half hours after the initial statement, giving speculators time to buy up the stock, resulting in its share price jumping by over 4% in pre-market trading.

Musk has a history of reckless tweeting, which has previously gotten him in trouble with the SEC and Tesla investors. The most famous of which was his claim in 2018 that he had secured the funding to take Tesla private. This resulted in regulators demanding Tesla appoint an in-house “Twitter sitter” who would pre-approve posts related to the company.

The news was disappointing for some Manchester United fans who have grown frustrated with the Glazer family’s ownership. At this season's opening home game, a large group of devoted fans walked to the stadium with banners reading “Fight greed. Fight for United. Fight Glazers.”

Manchester United Plc is the owner of the world-famous football club by the same name, along with the 75,000-seater stadium Old Trafford. The company generates revenue from winning leagues, sponsorship, licensing, and selling stadium tickets. Fans are not the only ones disappointed with the Glazer's leadership, investors who bought shares in the company at its IPO price in 2012 have seen the value of their holdings drop by 8.71% since.

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