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Tuesday August 16, 2022



Home Depot Posts Earnings

The Home Depot, Inc. (HD) released its third quarter earnings report on Tuesday, November 16. After the release of the earnings report, the company's shares rose over 5% to a record-high close of $392.33.

"As evidenced by our strong performance in the quarter, our team continues to do an outstanding job of operating with flexibility and agility," said Home Depot CEO Craig Menear. "Ultimately, this is what has allowed us to respond to the elevated home improvement demand that has persisted."

The Home Depot reported quarterly net earnings of $4.1 billion, or $3.94 per share. This was an increase compared with net earnings of $3.4 billion, or $3.20 per share, during the same quarter last year.

The Atlanta, Georgia-based home improvement retailer reported U.S. same-store sales growth of 6.1% year-over-year, exceeding analysts' expectations of 2.2% growth. A strong housing market has helped Home Depot as consumers are investing more in their homes. While customer transactions decreased 5.5% during the quarter, consumers were spending more when they did visit by raising the average ticket by 12.9% to $82.38.

The Home Depot, Inc. (HD) shares ended the week at $408.69, up 9.2% for the week.

Walmart Releases Earnings Report

Walmart Inc. (WMT) announced its third quarter earnings on Tuesday, November 16. Despite exceeding revenue expectations, the retail corporation's shares were down around 2.5% following the earnings release.

The company posted quarterly revenue of $140.5 billion, up 4.3% from $134.7 billion reported during the same quarter last year. This exceeded analysts' expectations of $135.6 billion.

"Our momentum continues with strong sales and profit growth globally," said Walmart's CEO, Doug McMillon. "We gained market share in grocery in the U.S., and more customers and members are returning to our stores and clubs around the world. Looking ahead, we have the people, the products, and the prices to deliver a great holiday season for our customers and members."

For the quarter, Walmart reported net income of $3.1 billion or $1.11 per share. This was a decrease from $5.14 billion or $1.81 per share reported in the same quarter the previous year.

Walmart reported eCommerce sales growth of 8% for the quarter. Over a two-year period, sales grew 87%. Walmart's U.S. comparable sales, excluding fuel, increased 9.2% for the quarter, beating expectations of 6.9%. Walmart's membership-based warehouse store, Sam's Club, reported comparable sales, excluding fuel, grew 13.9% exceeding the 8.7% predicted by analysts.

Walmart, Inc. (WMT) shares ended the week at $142.39, down 3.8% for the week.

La-Z-Boy Posts Earnings

La-Z-Boy, Inc. (LZB) released its second quarter earnings report on Tuesday, November 16. The residential furniture retailer's stock rose 8% following the earnings release.

The company posted quarterly sales of $575.9 million, up 25% from $459.1 million during the same quarter last year. This beat analysts' expectations of $540.04 million.

"La-Z-Boy Incorporated again delivered all-time, record-high sales for the quarter as we continued to increase capacity to service ongoing demand and our significant backlog, and realized pricing and surcharge actions to help offset rising raw material costs," said La-Z-Boy President and CEO Melinda D. Whittington. "Even while navigating a challenging operating environment with significant widespread supply chain disruption, we delivered strong results, including improved margins versus last quarter. Our business is much larger today than it was pre-pandemic, and demand remains robust across the entire enterprise."

For the quarter, La-Z-Boy reported net income of $39.5 million or $0.89 per share. This was an increase from net income of $34.9 million or $0.76 per share in the same quarter last year.

The Michigan-based furniture manufacturer is known for its recliners, sofas and chairs. In 2018, the company acquired Joybird, an e-commerce retailer and manufacturer of upholstered furniture. The company reported that Joybird's delivered sales increased 37% to $40 million during the quarter. The Board of Directors declared a quarterly cash dividend of $0.165 per share, up 10% over the prior quarter.

La-Z-Boy, Inc. (LZB) shares ended the week at $35.96, down 5.1% for the week.

The Dow started the week at 36,129 and closed at 35,602 on 11/19. The S&P 500 started the week at 4,689 and closed at 4,698. The NASDAQ started the week at 15,895 and closed at 16,057.

Treasury Yields Lower as Jobless Claims Drop

U.S. Treasury yields fell on Thursday after weekly jobless claims came in just higher than economist's expectations. Yields continued to lower on Friday as investors await President Biden's decision for Federal Reserve Chair.

On Thursday, the U.S. Department of Labor reported that the number of Americans filing for unemployment benefits continued a downward trend for a pandemic low of 268,000, marking the seventh consecutive week of decline. Economists had expected unemployment claims to fall to 260,000.

"There are challenges related to what would be typical under normal circumstances," said Bankrate's senior economic analyst Mark Hamrick. "And then there are the new dynamics related to the reordering of priorities on the part of many workers and families. Many Americans have taken the opportunity to re-evaluate what they want out of their career and their lives overall. For some, that's prompted a decision to change careers, employers, or both."

The benchmark 10-year Treasury note yield opened the week of 11/15 at 1.566%, hit a high of 1.651% on Wednesday and was trading as low as 1.516% on Friday. The 30-year Treasury bond yield opened the week at 1.934%, hit a high of 2.050% on Wednesday and was trading as low as 1.903% on Friday.

Treasury yields continued to fall on Friday as investors wait on President Biden's nomination for Federal Reserve Chair. The Federal Reserve Chair is responsible for directing monetary policy by determining the interest rates that banks charge, which affects the flow of credit to businesses, individuals and borrowers.

"It's a case in which it's a bigger Fed with a bigger footprint in markets," said BNY Mellon's chief economist, Vincent Reinhart. "Mission creep makes the job of the Fed chair and the Federal Reserve generally more complicated because there are more things that can go wrong and there are more non-monetary policy functions that you're going to be graded by."

The 10-year Treasury note yield closed at 1.54% on 11/19, while the 30-year Treasury bond yield was 1.91%.

Mortgage Rates Increase

Freddie Mac released its latest Primary Mortgage Market Survey on Thursday, November 18. Mortgage rates increased this week and are now the highest level in more than three weeks.

This week, the 30-year fixed rate mortgage averaged 3.10%, up from last week's average of 2.98%. Last year at this time, the 30-year fixed rate mortgage averaged 2.72%.

The 15-year fixed rate mortgage averaged 2.39% this week, up from 2.27% last week. During the same week last year, the 15-year fixed rate mortgage averaged 2.28%.

"The combination of rising inflation and consumer spending is driving mortgage rates higher," said Freddie Mac's Chief Economist, Sam Khater. "Shoppers looking to buy a home are fueling strong demand while ongoing inventory shortages are not improving in the presence of higher home prices. This reality illustrates the challenging situation facing the housing market."

Based on published national averages, the savings rate was 0.06% as of 11/15. The one-year CD averaged 0.14%.

Published November 19, 2021
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