Thursday June 1, 2023
Home Depot Supplies Earnings
Home Depot reported fourth quarter revenue of $35.8 billion, relatively unchanged from $35.7 billion during the same quarter last year. Analysts expected revenue of $35.9 billion for the quarter. Revenue for the full-year came in at $157.4 billion.
"Fiscal 2022 was another record year for The Home Depot as our team continued to successfully execute in a challenging and dynamic environment," said Home Depot CEO, Ted Decker. "Our ability to deliver growth on top of the $40 billion of sales growth achieved over the prior two-year period, while navigating persistent inflation, ongoing global supply chain disruptions, and a tight labor market, is a testament to investments we have made in the business, as well as our associates' relentless focus on our customers."
Home Depot reported quarterly net earnings of $3.4 billion, or $3.30 per adjusted share. This was comparatively unchanged from net earnings of $3.4 billion, or $3.21 per adjusted share during the same quarter last year. For the full-year, net income reached $17.1 billion.
The Atlanta, Georgia-based home improvement retailer reported that its U.S. comparable store sales declined 0.3% during the fourth quarter. The company also reported a decrease of 6% in customer transactions during the quarter, despite consumers spending more on each visit, raising the average ticket by 5.8% to $90.05. Home Depot updated its fiscal 2023 outlook following the earnings results and anticipates sales and comparable sales growth to remain flat compared to fiscal 2022.
The Home Depot, Inc. (HD) shares ended the week at $296.66, down 6.9% for the week.
Walmart Releases Earnings Report
Walmart Inc. (WMT) announced its fourth quarter and fiscal 2022 earnings on Tuesday, February 21. The company's shares held relatively steady after the company delivered an earnings report that included both strong revenue and sales growth.
The company posted quarterly revenue of $164.0 billion, up 7.3% from $152.9 billion reported during the same quarter last year. This exceeded analysts' expectations of $159.7 billion. Full-year revenue returned at $611.3 billion.
"We are excited about our momentum. The team delivered a strong quarter to finish the year, and as our results in the last two quarters show, they acted quickly and aggressively to address the inventory and cost challenges we faced last year," said Walmart CEO, Doug McMillon. "We built momentum in the third quarter and that continues. We are well-positioned to start this fiscal year."
For the quarter, Walmart reported net income of $6.3 billion or $2.32 per adjusted share. This was up 76% from the $3.6 billion or $1.28 per adjusted share reported in the same quarter the previous year. The company reported net income of $11.7 billion for the year.
The Arkansas-based retailer reported eCommerce sales growth of 17% for the quarter and 18% over a two-year period. Walmart's U.S. comparable sales, excluding fuel, increased 8.3% for the quarter. Walmart's membership-based warehouse store, Sam's Club, also reported an increase of 12.2% in comparable sales, excluding fuel. The company revised its full-year outlook and expects net sales to increase between 2.5% to 3% and for their adjusted earnings per share to be between $5.90 to $6.05.
Walmart, Inc. (WMT) shares ended the week at $142.47, down 1.9% for the week.
EBay Posts Earnings
EBay Inc. (EBAY) released its fourth quarter and full-year earnings report on Wednesday, February 22. The company reported a decline in both revenue and net income, causing its shares to drop almost 6% following the release of the report.
The company reported quarterly revenue of $2.5 billion, exceeding analysts' estimates of $2.4 billion. This was down 4% from $2.6 billion at the same time last year. For the full-year, revenue was down 6% to $9.8 billion.
"In 2022, we made significant progress on our multi-year strategic journey," said EBay's CEO, Jamie Iannone. "Our focus category playbook continues to drive underlying growth in our business and the investments we have made in core technology are enabling us to innovate on behalf of our customers more quickly. We have a talented team, a strong strategic vision and a persistent focus on operational excellence that will create long-term value for our shareholders in the years ahead."
The company reported quarterly net income of $672 million or $1.23 per adjusted share. This was down from $1.97 billion or $3.25 per adjusted share at the same time last year. For the full-year, EBay reported a net loss of $1.27 billion.
The eCommerce company reported 134 million active buyers for the fourth quarter, a 9% decrease compared to this time last year. Advertising products revenue was up 19%, generating $276 million during the quarter. Gross merchandise volume, which measures the value of all goods sold on the company's website, declined 12% to $18.2 billion in the fourth quarter. The company foresees first quarter revenue to be between $2.46 to $2.50 and for their adjusted earnings per share to be between $1.05 to $1.09.
EBay Inc. (EBAY) shares ended the week at $45.07, down 7.2% for the week.
The Dow started the holiday week of 2/20 at 33,700 and closed at 32,817 on 2/24. The S&P 500 started the week at 4,052 and closed at 3,970. The NASDAQ started the week at 11,640 and closed at 11,395.
Treasury Yields Rise
On Friday, the Commerce Department announced that the Personal Consumption Expenditure (PCE), which measures the cost of goods and services purchased by U.S. households, rose 0.6% in January. PCE, which excludes food and energy, saw an annual increase of 4.7%.
"The unexpectedly strong 0.6% [month over month] increase in core PCE in January, which pushed the annual rate of core inflation up to 4.7%, from 4.6%, is another sign that the Fed might have to leave its policy rate higher for longer," said chief North America economist at Capital Economics, Paul Ashworth.
The benchmark 10-year Treasury note yield opened the week of February 20 at 3.82% and traded as high as 3.98% on Thursday. The 30-year Treasury bond opened the week at 3.87% and traded as high as 3.98% on Wednesday.
On Thursday, the U.S. Department of Labor reported that initial claims for unemployment fell 3,000 to 192,000 for the week ending February 18. Continuing unemployment claims decreased 37,000, reaching 1.65 million.
"Everything that we are seeing is indicating that we have a really tight labor market or we would have seen claims stay persistent much longer," said professor of economics at Tulane University, Gary Hoover. "And we would have seen increases in initial jobless claims. Neither one of those are taking place."
The 10-year Treasury note yield finished the week of 2/20 at 3.95%, while the 30-year Treasury note yield finished the week at 3.93%.
Mortgage Rates Increase
This week, the 30-year fixed rate mortgage averaged 6.50%, up from last week's average of 6.32%. Last year at this time, the 30-year fixed rate mortgage averaged 3.89%.
The 15-year fixed rate mortgage averaged 5.76% this week, up from 5.51% last week. During the same week last year, the 15-year fixed rate mortgage averaged 3.14%.
"The economy continues to show strength, and interest rates are repricing to account for the stronger than expected growth, tight labor market and the threat of sticky inflation," said Freddie Mac's Chief Economist, Sam Khater. "Our research shows that rate dispersion increases as mortgage rates trend up. This means homebuyers can potentially save $600 to $1,200 annually by taking the time to shop among lenders to find a better rate."
Based on published national averages, the savings rate was 0.35% as of 2/21. The one-year CD averaged 1.36%.
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