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A Tale of Two Retailers

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Tuesday, February 20, 2018

We’ve begun the final leg of Q4 earnings season ahead of the initial opening bell of the new holiday-shortened week, with prominent retailers taking center stage. For the past several quarters, we’ve seen healthy quarterly figures from most sectors in the market, but it’s only been fairly recently that retailers have been able to join the party.

As a result, where in the past we’d seen the Retail sector give back quarterly gains overall, these days we may see an acceleration on already strong Q4 totals. This week begins the process of retailers posting earnings, and we do so with Home Depot (HD - Free Report) and Walmart (WMT - Free Report) , which posted differing results and are being treated much differently in pre-market trading.

Home Depot posted a 7-cent beat tp $1.69 per share on revenues of $23.88 billion, which surpassed the Zacks consensus estimate of $23.66 billion. This marks a 17.4% upswing in earnings from the year-ago quarter, and 7.5% growth on the top-line. It’s also the 6th straight revenue beat, while Home Depot continues its remarkable string of 5 straight years beating earnings estimates.

Further, earnings guidance for full-year 2018 looks for 28% earnings growth, as home restoration projects and general construction business improve. Shares of Home Depot have climbed 3% in today’s pre-market on the news. For more on HD’s earnings, click here.

Walmart, however, missed earnings estimates by 3 cents per share to $1.33. This is still 2.3% higher than year-ago earnings, and quarterly sales of $136.3 billion topped the $135 billion we expected from the world’s largest big-box retailer.

But guidance was weaker than expected for full-year 2018, and this has helped WMT shares sell off 7.5% in early trading today, following the earnings release. Net sales growth in its International markets grew 6.7%, nearly double that of U.S. growth. Yet 3/4 on Walmart’s business remains in the U.S. For more on WMT’s earnings, click here.

Mark Vickery
Senior Editor

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