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Wednesday October 20, 2021

Finances

Finances
 

Walmart Releases Earnings

Walmart Inc. (WMT) released its second quarter earnings report on Tuesday, August 17. The American retail corporation's shares were down 1.5% following the report's release, despite exceeding expectations on revenue and earnings.

The company posted quarterly revenue of $141.0 billion, up 2.4% from $137.7 billion reported during the same quarter last year. This exceeded analysts' expectations of $136.9 billion.

"We grew market share in U.S. grocery, added thousands of new sellers to our marketplace, rapidly grew advertising businesses around the world, and we're finding innovative ways to commercialize our data and build technology," said Walmart CEO Doug McMillon. "We have a unique ecosystem of products and services designed to serve customers in broader, deeper ways, and we're grateful to our associates for making it all happen."

For the quarter, Walmart reported net income of $4.3 billion or $1.52 per share. This was a decrease from net income of $6.5 billion or $2.27 per share reported in the same quarter last year.

Walmart reported eCommerce sales growth of 6% for the quarter. Over a two-year period, sales grew 103%. The company noted that global eCommerce sales are projected to reach $75 billion by the end of the year. Walmart's U.S. comparable sales, excluding gas sales, increased 5.2% in the quarter, beating expectations of 3.1% growth. Sam's Club, operated and owned by Walmart, reported comparable sales, excluding gas sales, grew 7.7% in the quarter.

Walmart Inc. (WMT) shares ended the week at $151.45, relatively unchanged for the week.

Home Depot Reports Earnings


The Home Depot, Inc. (HD) released its latest earnings report on Tuesday, August 17. The company's revenue and profit grew from the prior year's quarter.

Net sales came in at $41.12 billion for the second quarter. This was up 8.1% from $38.05 billion in net sales last year at this time.

"I am very proud of our associates, who continue to demonstrate a relentless focus on serving our customers," said Home Depot CEO Craig Menear. "As a result of their efforts, we achieved a milestone of over $40 billion in quarterly sales for the first time in Company history. I would like to extend my sincere appreciation to our team, as well as our supplier and supply chain partners, as they continue to operate in this dynamic and challenging environment."

Home Depot reported quarterly net earnings of $4.81 billion, or $4.54 per share. This was an increase from $4.33 billion, or $4.04 per share during the same quarter last year.

The Atlanta-based company reported U.S. same-store sales growth of 3.4%, which fell short of analysts' expectation of 4.9% growth. As COVID-19 restrictions have eased, home improvement projects seem to have waned as customer transactions decreased 5.8% in the quarter. After the report's release, Home Depot signaled that the second half of the year may return mixed results.

The Home Depot, Inc. (HD) shares ended the week at $329.24, relatively unchanged for the week.

Krispy Kreme Posts Earnings


Krispy Kreme, Inc. (DNUT) released its second quarter earnings report on Tuesday, August 17. The doughnut chain reported as a publicly traded company for the first time in approximately five years.

Net revenue came in at $349.19 million for the quarter. This was up 42.6% from $244.97 million in net revenue last year at this time.

"The second quarter saw great continued momentum in the U.S. and Canada, enhanced by strong ongoing recovery in International," said Krispy Kreme CEO Mike Tattersfield. "As a result, we are confident in our short and long-term growth targets as we continue to execute on our strategy, providing awesome fresh doughnuts as we become the most loved sweet treat brand in the world."

The company reported a quarterly net loss of $17.14 million, or $0.13 per share. This was a decline from a net loss of $12.63 million, or $0.10 per share during the same quarter last year.

Krispy Kreme returned as a publicly traded company on July 1, 2021, after being taken private in 2016. The company also owns Insomnia Cookies and has 200 cookie shops across the country. The company's ecommerce sales totaled 19% of total company shop sales in the quarter. During the second quarter, Krispy Kreme added 1,300 global access points to increase the availability of its fresh doughnuts. The company touted success with its marketing and innovations in the U.S., which created over 16.3 billion media impressions.

Krispy Kreme, Inc. (DNUT) shares ended the week at $15.07, relatively unchanged for the week.

The Dow started the week at 35,491 and closed at 35,120 on 8/20. The S&P 500 started the week at 4,462 and closed at 4,442. The NASDAQ started the week at 14,772 and closed at 14,715.
 

Treasury Yields Edge Upwards

U.S. Treasury yields showed a slight uptick in the middle of the week, following the Federal Reserve's Federal Open Market Committee's most recent meeting minutes. New jobless claims declined to near pre-pandemic levels, continuing the downward trend of recent weeks.

The Federal Open Market Committee (FOMC) released its latest meeting minutes on Wednesday. During the meeting, which was held on July 27 and 28, members discussed the possibility of reducing government asset purchases later in the year, often referred to as tapering. Bond yields were muted in reaction to the news.

"Various participants commented that economic and financial conditions would likely warrant a reduction in coming months," the FOMC minutes stated. "Several others indicated, however, that a reduction in the pace of asset purchases was more likely to become appropriate early next year because they saw prevailing conditions in the labor market as not being close to meeting the Committee's 'substantial further progress' standard or because of uncertainty about the degree of progress toward the price-stability goal."

The benchmark 10-year Treasury note yield rose to a high of 1.299% on Wednesday, but shifted to 1.230% during morning trading on Friday. The yield on the 30-year Treasury bond reached a high of 1.944% during trading on Wednesday, while reaching a peak of 1.886% during trading on Friday.

On Thursday, the U.S. Department of Labor reported first time unemployment claims reached 348,000, a low last seen in mid-March 2020. This is down 29,000 from the previous week and was below economists' expectations of 365,000. Continuing unemployment claims fell 79,000 to 2.82 million.

"A healthy drop in unemployment claims is the latest evidence the rise of the Delta variant isn't having a significant effect on the economy," said corporate economist at Navy Federal Credit Union, Robert Frick. "We can infer that hiring remains strong in August, pointing to a healthy jobs report for this month."

The 10-year Treasury note yield closed at X% on 8/20, while the 30-year Treasury bond yield was X%.
 

Mortgage Rates Relatively Steady

Freddie Mac released its latest Primary Mortgage Market Survey on Thursday, August 19. The rates made slight movements week-over-week.

This week, the 30-year fixed rate mortgage averaged 2.86%, down from last week's average of 2.87%. Last year at this time, the 30-year fixed rate mortgage averaged 2.99%.

The 15-year fixed rate mortgage averaged 2.16% this week, up from 2.15% last week. During the same week last year, the 15-year fixed rate mortgage averaged 2.54%.

"Mortgage rates stayed relatively flat this week," said Freddie Mac's Chief Economist Sam Khater. "Housing is in a similar phase of the economic cycle as many other consumer goods. While there is strong latent demand, low supply has caused prices to rise as shortages restrict the amount of sales activity that otherwise would occur."

Based on published national averages, the savings rate was 0.06% as of 8/16. The one-year CD averaged 0.14%.

Published August 20, 2021
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