Finances

The Home Depot, Inc. (HD) released its third quarter earnings report on Tuesday, November 15. After reporting better-than-expected earnings, the company's shares rose slightly over 1% following the release.

The company reported revenue of $38.87 billion, up nearly 6% from $36.82 billion during the same quarter last year. Revenue was slightly ahead of analysts' expectations of $37.96 billion.

"We delivered another solid performance in the third quarter, driven by strength in project-related categories across the business," said Home Depot CEO, Ted Decker. "Our team has done a fantastic job serving our customers while continuing to navigate a challenging and dynamic environment."

Home Depot reported quarterly net earnings of $4.34 billion, or $4.24 per diluted share. This is a 5% increase from net earnings of $4.13 billion, or $3.92 per diluted share during the same quarter last year.

The Atlanta, Georgia-based home improvement retailer reported U.S. comparable store sales growth of 4.5%, year-over-year, exceeding analysts' expectations of 3%. The company also reported a decrease of 4.3% in customer transactions during the quarter despite consumers spending more on each visit, raising the average ticket by 9% to $89.67. Home Depot maintained its 2022 outlook following the results, expecting a 3% growth in comparable sales and a mid-single-digit earnings per share increase.

The Home Depot, Inc. (HD) shares ended the week at $313.18, relatively unchanged for the week.

Walmart Releases Earnings Report

Walmart Inc. (WMT) announced its third quarter earnings on Tuesday, November 15. The company delivered strong revenue growth which caused a more than 6% rise in shares following the report.

The company posted quarterly revenue of $152.81 billion, up 8.7% from $140.53 billion reported during the same quarter last year. This exceeded analysts' expectations of $147.75 billion.

"We had a good quarter with strong top-line growth globally led by Walmart and Sam's Club U.S., along with Flipkart and Walmex," said Walmart CEO, Doug McMillon. "Walmart U.S. continued to gain market share in grocery, helped by unit growth in our food business. We significantly improved our inventory position in Q3, and we will continue to make progress as we end the year."

For the quarter, Walmart reported net losses of $1.79 billion, or $0.66 per adjusted share. A stark difference from the $3.11 billion or $1.11 per adjusted share reported in the same quarter the previous year. On an adjusted basis, the company reported earnings of $1.50 per share.

The Arkansas-based retailer reported eCommerce sales growth of 16% for the quarter and 24% over a two-year period. Walmart's U.S. comparable sales, excluding fuel, increased 8.2% for the quarter, beating expectations of a 3.6% growth. Walmart's membership-based warehouse store, Sam's Club, also reported a 10% increase in comparable sales, excluding fuel, exceeding the 8.7% predicted by analysts. The quarterly net loss was attributed to payments of $3.1 billion in nationwide opioid settlements. The company raised its full-year outlook to reflect the better-than-expected earnings release and anticipates a decline in their adjusted earnings per share of 6% to 7%, and a growth in their net sales of about 5.5%.

Walmart, Inc. (WMT) shares ended the week at $150.23, up 6.1% for the week.

Krispy Kreme Reports Earnings

Krispy Kreme, Inc. (DNUT) released its third quarter earnings report on Tuesday, November 15. The doughnut chain reported revenue growth that exceeded expectations but narrowly missed earnings estimates.

Net revenue came in at $377.5 million for the quarter. This was up 10% from $342.8 million in net revenue last year at this time, ahead of analysts' expectations of $362.0 million.

"We were pleased with our strong organic revenue growth in the third quarter, led by an acceleration in growth in the U.S. and Canada and Market Development," said Krispy Kreme CEO, Mike Tattersfield. "Margins improved significantly in the final period of the quarter as we successfully implemented price increases in the U.S. coupled with decreased promotional activity after Labor Day. Strong momentum continues into the fourth quarter enhanced by further recent pricing actions in the U.S. and U.K. and a robust global Halloween performance."

Krispy Kreme reported a quarterly net loss of $11.8 million, or $0.08 per diluted share. This is a greater net loss from $8.1 million, or $0.04 per diluted share during the same quarter last year.

The doughnut producer reported domestic organic revenue growth of 12% in the quarter, and 16% internationally. Organic growth was largely driven by strong performances in their hub and spoke operating models. The company's Ecommerce sales totaled 19% of total sales in the quarter. During the third quarter, Krispy Kreme added 294 access points, which provide access to stores in more than 11,700 locations globally. Krispy Kreme announced plans to further expand internationally by opening shops in Jamaica and France in 2023. This expansion would bring their total development deals in 2022 to 7 international countries, which represents over 5,000 new potential points of access.

Krispy Kreme, Inc. (DNUT) shares ended the week at $15.23, up 6.5% for the week.

The Dow started the week at 33,662 and closed at 33,541 on 11/18. The S&P 500 started the week at 3,978 and closed at 3,965. The NASDAQ started the week at 11,234 and closed at 11,146.

Yields on U.S. Treasurys fell early in the week after producer prices rose less than expected in October. Yields somewhat recovered on Thursday as markets digested a decline of jobless claims in the still-tight labor market.

On Tuesday, the Bureau of Labor Statistics released October's producer price index (PPI) indicating slowing inflation. The October PPI grew 0.2%, better than economists' estimates of 0.4% growth. On an annualized basis, PPI grew 8%, down from 8.4% in September.

"The PPI read certainly adds more fuel to the fire for those who feel we may finally be on a downward inflation trend," said Mike Loewengart, head of model portfolio construction at Morgan Stanley's Global Investment Office. "The market embraced last week's consumer downtick and today's initial reaction seems to be more of the same as expectations rise that the Fed could pull back from 75 basis point hikes next month, especially considering [Federal Reserve Board Vice Chair Lael] Brainard's comments on slowing the hikes yesterday."

The benchmark 10-year Treasury note yield opened the week of November 14 at 3.82% and traded as low as 3.67% on Wednesday. The 30-year Treasury bond opened the week at 4.06% and traded as low as 3.84% on Wednesday.

On Thursday, the U.S. Department of Labor reported that initial unemployment claims decreased 4,000 to 222,000 for the week ending November 12, falling below analysts' estimates of 225,000 for the week. Continuing unemployment claims increased 13,000, reaching 1.5 million.

"Layoff announcements from larger companies have become more frequent and for larger numbers of jobs than what we saw over the summer," said Thomas Simons, economist at Jefferies LLC. "So we are likely to see these jobless claims numbers rise in the weeks and months ahead."

The 10-year Treasury note yield finished the week of 11/18 at 3.82%, while the 30-year Treasury note yield finished the week at 3.93%.

Freddie Mac released its latest Primary Mortgage Market Survey on Thursday, November 17. Mortgage rates dropped to below 7% but remain high as inflation continues to impact the housing market.

This week, the 30-year fixed rate mortgage averaged 6.61%, down from last week's average of 7.08%. Last year at this time, the 30-year fixed rate mortgage averaged 3.10%.

The 15-year fixed rate mortgage averaged 5.98% this week, down from 6.38% last week. During the same week last year, the 15-year fixed rate mortgage averaged 2.39%.

"Mortgage rates tumbled this week due to incoming data that suggests inflation may have peaked," said Freddie Mac's Chief Economist, Sam Khater. "While the decline in mortgage rates is welcome news, there is still a long road ahead for the housing market. Inflation remains elevated, the Federal Reserve is likely to keep interest rates high and consumers will continue to feel the impact."

Based on published national averages, the savings rate was 0.21% as of 10/17. The one-year CD averaged 0.71%.