Walmart and Home Depot earnings preview: Will the retail giants keep roaring?

On Tuesday, 20 February, Walmart and Home Depot earnings reports will go public. This comes after a period of gains throughout the retail sector over the Christmas and New Year period. Retail sales increased by 0.6% in December, while core retail sales jumped 0.8%. 

Despite the squeeze on disposable incomes thanks to inflation and soaring interest rates post-pandemic, increased consumer spending has helped the economy avert a possible recession. The year 2024 got off to a strong start with retail sales growing by 2.34% year on year, according to data from the National Retail Federation (NRF) Retail Monitor.

The president of the National Retail Federation, Matthew Shay, expressed confidence that consumer spending would remain strong after impressive post holiday numbers. 

“January sales continued the strong performance of retail in December, which is impressive coming off a record holiday season. More importantly, year-on-year growth was solid, showing consumers are still optimistic and willing to act on the spending power brought by growing employment and wages.”

What should you expect from the earnings calls?

Walmart Earnings Call

Wall Street analysts expect Walmart earnings of 1.63 dollars a share, on 170.44 billion dollars in revenue. These numbers would represent a revenue growth of 6% from Q3’s 160.8 billion dollars. 

During its Q3 earnings call, the company’s Chief Financial Officer John David Rainey said that their strategy was “winning”. 

“Our financial results clearly demonstrate that our omnichannel strategy is winning. We’re growing our share across categories, deepening customer engagement across channels, while investing in areas to widen our competitive advantage.”

The company’s stock has gone up 8% year to date after starting the year at 157.65 dollars. 

 Walmart stock growth chart

With the company’s PE (price-to-earnings) ratio just slightly above industry standard  at 28.05, traders are urged to consider the various factors that may influence the stock's performance. A rate cut for instance, would increase the spending power of households and could trigger a shopping spree that will help the stock. 

Home Depot earnings call

Despite decreasing demand in big ticket home renovations, Home Depot has pulled off some impressive numbers to beat analyst estimates for Q3. Especially after they posted earnings per share of 3.81 dollars on revenues of 37.71 billion dollars. 

The consensus estimate for Q4 has been set at earnings per share of 2.76 dollars and 34.6 billion dollars in revenue. The company’s stock has been on the rise since the tail end of last year, with the uptrend remaining strong year-to-date.

Home Depot stock growth chart in 2023

End-of-year sales were boosted by innovative interventions, such as the company’s shoppable CTV series featuring Grammy award winner Jordin Sparks, that created positive publicity.

Future of Home Depot

The company aims to improve its product assortment and fulfillment operations, as well as its digital capabilities, which will increase its growth outlook. Home Depot’s acquisition of Construction Resource’s parent company, International Design Group, will help the company acquire a larger share of the construction industry giving it more control over an addressable market of 475 billion dollars.

President and CEO of Home Depot, Ted Decker said that the acquisition would help accelerate their Pro growth opportunity with “a successful showroom model, an exceptional sales force, and proven, long-term relationships with renovator, remodeler and residential new-construction Pros.”

With the company’s PE ratio at 22.95 as of Wednesday, 14 February, some analysts may see the stock as good value for money. Traders are urged to also consider other factors that may affect the stock price such as interest rate announcements as well as employment numbers. 

So, will Walmart and Home Depot keep roaring? The numbers will tell. Traders should keep a keen eye on the earnings call to see if the company outperformed market estimates. This could have implications on price movement.

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Disclaimer:

This information is considered accurate and correct at the date of publication. Changes in circumstances after the time of publication may impact the accuracy of the information. 

The performance figures quoted refer to the past, and past performance is not a guarantee of future performance or a reliable guide to future performance. Trading is risky. We recommend you do your own research before making any trading decisions.