Earnings Wrap: Home Depot Versus Wal-Mart (HD, WMT)

This morning brought earnings from two key DJIA components.  The Home Depot, Inc. (NYSE: HD) and Wal-Mart Stores Inc. (NYSE: WMT) are seeing similar trends and the two are seeing similar reactions so far in the early morning trading.

The Home Depot, Inc. (NYSE: HD) had mixed guidance but earnings beat expectations.  The home improvement retail giant reported earnings of $0.51 EPS and reported that revenues rose 1.4% to $16.6 billion; Thomson Reuters estimates were $0.48 EPS and $16.59 billion in revenues.  Fiscal-2011 guidance was mixed at $1.94 EPS vs. $1.90 previously offered and that implies a penny higher for the coming quarter.  The company sees Fiscal-2011 revenues up about 2%. Same store sales in the third quarter were up by +1.4%, or up 1.5% for U.S. stores.

Wal-Mart Stores Inc. (NYSE: WMT) rarely has any huge surprises.  The #1 retailer in the world reported earnings of $0.90 EPS excluding a $0.05 tax gain and that was in-line with the Thomson Reuters consensus of $0.90; revenues rose 2.6% but were a tad light at $101.24 billion versus the $102.25 billion expected.  Q3 U.S. comparable store sales were as follows: -0.5% all in all as Wal-Mart was -1.3% and Sam’s was +3.8%. For the Q4-period, Wal-Mart sees $1.29 to $1.33 EPS versus $1.28 estimates; for revenue it expects comparable store sales to range between -1.0% and +2.0% with Sam’s Club at +1.0% to 3.0%. U.S. net sales were flat but international sales were up almost 8% if adjusted for currency.  A key takeaway is that U.S. store traffic decreased and another trend was that the average ticket was lower as well.

Home Depot shares are up 0.57% at $31.57 on light trading volume.

Wal-Mart Stores is up 0.9% at $54.45 on light trading volume.

JON C. OGG