Walmart and Home Depot Earnings Reveal Contrasting Performances

• Walmart reports strong revenue growth, driven by e-commerce and newer ventures, attracting higher-income shoppers.
  
• Home Depot's earnings surpass estimates, but sales decline; company reaffirms guidance and increases dividend despite housing market challenges.

Walmart Outpaces Sales Growth

Walmart reported a strong total revenue of $173.4 billion in Q4 FY24, a 5.7% increase from the previous year. The company's earnings per share (EPS) on a GAAP basis were $2.03, which is a decrease of 12.5%, but on an adjusted basis, the EPS increased by 5.3%. Walmart US experienced a comparable sales growth of 4.0% excluding fuel, and Walmart International's net sales grew by 13.0% on a constant currency basis.

The retail giant's digital strategies have paid off, with global e-commerce sales growing by 23% year-over-year in the fourth quarter. Walmart's newer ventures, such as advertising and its subscription-based membership program Walmart+, have also contributed to its operating income growth outpacing its sales growth.

Walmart's stock has seen an 18% gain over the past year, and the company has been successful in attracting higher-income shoppers. Walmart's market cap stood at $515.83 billion as of the latest close, with the stock up about 22% for the year.

Housing Market Slows Down Home Depot

Home Depot's earnings per share of $3.63 surpassed consensus estimates, but its revenue of $36.42 billion slightly missed expectations. The company's sales declined 2.3% to $36.42 billion from the previous year, and comparable sales fell 2.8%. Home Depot's gross profit decreased 1% year over year, and its operating income fell 8.5%.

Despite the mixed financial performance, Home Depot has reaffirmed its fiscal 2024 guidance and increased its quarterly dividend by 7.7%. The company's stock is up about 13%, and it continues to return value to shareholders through stock buybacks and dividends.

Home Depot's debt-to-equity (D/E) ratio of about 40.38 indicates a significant use of debt financing, and the company's P/E ratio stands at approximately 22.31. The company's fortunes are closely tied to the housing market, which has been experiencing a slowdown.

Future Plans of the Companies

Walmart's P/E ratio is ahead of Home Depot's, suggesting that investors may see Walmart as offering better value relative to Home Depot. Walmart's shares are priced at around 0.75 times sales, which could be more tempting for investors. Walmart's strategy of offering lower prices and more convenient shopping options has helped it increase its market share among higher-income shoppers.

Home Depot, on the other hand, has a more cautious outlook for the year, with sales expected to increase by 1% and comparable sales to decline by 1%. The company's performance is more sensitive to the housing market, which has been under pressure due to high home prices and mortgage rates.

Walmart's latest earnings reflect strong growth in e-commerce and an expanding customer base, while Home Depot's results show resilience despite a challenging housing market. Both companies are adapting to changing market conditions and consumer behaviors, with Walmart focusing on digital expansion and Home Depot maintaining its commitment to shareholder returns.