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Friday April 3, 2020

Finances

Finances
 

Walmart's Online Sales Soar

Walmart Inc. (WMT) released its quarterly and full-year earnings report on Tuesday, February 18. The world's largest retailer's shares remained static after the earnings release, despite strong eCommerce growth.

Walmart reported quarterly revenue of $141.67 billion. This is up 2.1% from last year's fourth quarter revenue of $138.79 billion. For the full year, the company reported revenue of $523.96 billion.

"In Q4, we saw strong performance in the U.S. with eCommerce and Sam's Club plus strength in Mexico, India and China," said Walmart President and CEO Doug McMillon. "We started and finished the quarter with momentum, while sales leading up to Christmas in our U.S. stores were a little softer than expected."

The company announced earnings of $4.14 billion for the quarter, which is up from earnings of $3.69 billion one year ago. On an adjusted earnings per share basis, the company reported earnings of $1.46 per share.

The company's eCommerce sales were up 33% in the quarter. Walmart's grocery pickup and delivery had strong gains in the quarter. For the full year, eCommerce sales grew 40%, in line with Walmart's goal. Online sales benefitted from the launch of next day delivery during the fiscal year. The company's outlook for the coming fiscal year is lower than expected, with eCommerce growth at approximately 30%.

Walmart Inc. (WMT) shares ended the week at $118.58, virtually unchanged for the week.

Domino's Pizza Delivers Hot Earnings


Domino's Pizza, Inc. (DPZ) reported its latest quarterly and full-year earnings on Thursday, February 20. The Michigan-based pizza chain's strong earnings and revenue caused shares to jump more than 25% following the report's release.

Revenue for the fourth quarter came in at $1.15 billion, up from $1.08 billion during this quarter last year. This beat analysts' expectations of $1.13 billion.

"I am extremely proud of the accomplishments of our franchisees and our team members from around the world, not just in the fourth quarter, but throughout all of 2019," said Domino's Chief Executive Officer Ritch Allison. "Our relentless focus on our customers, our franchisees and the long-term growth and profitability of the Domino's business model helped us deliver a solid 2019 in the face of unique competitive headwinds."

Domino's reported net income of $129.3 million during the quarter. This was up from $111.6 million reported at this time last year.

The world's largest pizza chain reported domestic same store growth of 3.4% for the quarter, exceeding analysts' expectation of 2.3% growth. Last year, same store growth was 6.3% domestically and 3.3% internationally. In 2019, Domino's launched its GPS technology, named Domino's Tracker, allowing customers to track the progress of their pizza from the store to their doorstep at approximately 25% of its locations. The Domino's Tracker technology is expected to be added to the remaining stores in 2020. The company netted 141 additional stores in the U.S. and 351 internationally during the quarter.

Domino's Pizza, Inc. (DPZ) shares ended the week at $371.96, up 26.8% for the week.

Garmin Navigates Beyond Expectations


Garmin, Ltd. (GRMN) reported its full-year and quarterly earnings on Wednesday, February 19. The company surpassed analysts' expectations as fitness gurus and aviation experts sought Garmin's navigation devices.

The company's fourth quarter revenue was $1.1 billion. This was 18% higher than the same period last year and surpassed analysts' estimates of $1.0 billion. Additionally, the company reported full-year revenue of $3.8 billion.

"2019 was another exciting year of growth thanks to our strong lineup of products and unique innovations," said Cliff Pemble, President and CEO of Garmin Ltd. "We entered 2020 with a great lineup of recently introduced products with more on the way. We are excited about the future because each business segment offers unique growth opportunities for 2020 and beyond."

Garmin reported net income of $360.8 million, or $1.90 per share. Net income for the same quarter last year was $190.2 million, or $1.01 per share.

Garmin designs and manufactures global positioning system (GPS) enabled products across five different areas–automotive/mobile, aviation, marine, outdoor and fitness. The aviation, marine, outdoor and fitness divisions collectively grew 24% from the prior year's quarter. Despite being selected by Ford to provide electric vehicle navigation software for Ford's Mustang Mach-E, Garmin's automotive segment was down 15%.

Garmin, Ltd. (GRMN) shares ended the week at $96.58, down 1.9% for the week.

The Dow started the week of 2/18 at 29,853 and closed at 28,992 on 2/21. The S&P 500 started the week at 3,369 and closed at 3,338. The NASDAQ started the week at 9,679 and closed at 9,577.
 

Treasury Yields Hit Record Lows

U.S. Treasury Yields fell this week, with the 30-year note hitting a record low. Investors are continuing to monitor monetary policy and containment of the coronavirus, officially named "COVID-19" by the World Health Organization.

On Friday, the yield on the 30-year Treasury bond sank to an all-time record low of 1.89%. Investors flock to safe haven assets in the face of uncertainty. Yields move inversely to prices.

"It's hard to imagine any scenario where we get an 'all clear' on the COVID-19 front by Monday," said Jon Hill, an interest-rate strategist at BMO Capital Markets. "But things can certainly get much worse in the next 60 hours. That asymmetry means its very hard to go into the weekend short safe haven assets."

On Wednesday, the Federal Reserve released the minutes from the Federal Open Market Committee's (FOMC) most recent meeting. The minutes noted the U.S. economy was stronger than expected, but mentioned continued monitoring of risk factors, including low inflation.

"Some trade uncertainties had diminished recently, and there were some signs of stabilization in global growth," the FOMC minutes stated. "Nonetheless, uncertainties about the outlook remained, including those posed by the outbreak of the coronavirus."

The 10-year Treasury note yield closed at 1.47% on 2/21, while the 30-year Treasury bond yield was 1.92%.
 

Mortgage Rates Rise

Freddie Mac released its latest Primary Mortgage Market Survey on Thursday, February 20. The report showed rates were up slightly.

The 30-year fixed rate mortgage rate averaged 3.49%, up from 3.47% last week. At this time last year, the 30-year fixed rate mortgage averaged 4.35%.

This week, the 15-year fixed rate mortgage averaged 2.99%, up from 2.97% last week. Last year at this time, the 15-year fixed rate mortgage averaged 3.78%.

"The low mortgage rate environment continues to spur homebuying activity, with applications to purchase a home up fifteen percent from a year ago," said Freddie Mac's Chief Economist Sam Khater. "We've seen new residential construction surge over the last few months, on pace to reach the highest level in more than a decade. This is a good sign for the inventory-starved housing market and is a promising indication for the spring homebuying season."

Based on national averages, the savings rate was 0.09% for the week of February 17. The one-year CD averaged 0.48%.

Published February 21, 2020

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