🛒 Walmart: Still the Great Wal Of America?

Bitcoin crumbles! Gamestop returns to Reddit.


Hey Global Investor, here’s what you need to know before the US markets open.

Market Snapshot 📈

S&P 500 (Tuesday’s Close) 4,127.83 -35.46 (0.85%)

NASDAQ (Tuesday’s Close) 13,303.64 -75.41 (0.56%)

FTSE 100 (5 PM IST) 6,938.19 -96.05 (1.37%)

NIFTY 50 (Today’s Close) 15,030.15 -77.95 (0.52%)

USDINR (Today’s Close) 73.16 (1 Year -3.17%)

 


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✍️ Winvesta Writes

SPACs – All You Need to Know

If you invest in US markets, it is unlikely that you haven’t heard of SPACs yet. SPACS have taken the world by storm, and they only seem to be growing.

Learn more about SPACs on Winvesta Blog.

 


🚜 John Deere: Deer Or A Gazelle? Part II

Shares of agri-equipment manufacturer Deere & Company (DE) are up 41% this year. The stock has tripled over the last 12 months. The market for its products is stronger than ever. While Wall Street experts are scratching their heads, investors are surely not complaining! (Tweet This)

Demand Beyond Expectations
A long-lasting trade war, flash floods, and the pandemic – the farm equipment business has had its challenges for the past few years; yet, it has only emerged stronger after overcoming each challenge. Tractor sales grew at an average of 46% YoY every month this year alone.

This revival in demand has taken the likes of equipment manufacturers such as Deere & Company by surprise. Having suspended its annual guidance in March 2020 at the onset of the pandemic, tractor and other farm equipment maker, Deere, is now unable to keep pace with production, in the face of an incessant rise in demand.

In November, Deere reported an order backlog of $8.1B in the agri and turf equipment segment. The waiting period for order delivery is now routinely six months.

Speed Breaker Ahead?

Consequently, Deere’s financial performance has spurred ahead. Q1 sales were up 23% – the first instance of double-digit sales growth in eight quarters. Deere had projected 2021 net income of around $3.8B. In light of this demand resurgence, the company has revised the number to around $4.8B.

Q1 was also the company’s first billion-dollar quarter after Q2 2019, with a net income of $1.22B. In keeping with all of this positive sentiment, the stock has been climbing, perhaps even faster than demand for Deere’s products! This seems to have created some cause for concern that all of the good news has been priced in.

Wall Street experts concur that agribusiness is possib

🛒 Walmart: Still the Great Wal Of America?

Flipkart’s owner Walmart’s (WMT) Q1 results surpassed analyst expectations on most parameters. The expectations of pent-up demand also prompted the retail giant to raise guidance for the year. It is also expanding its presence in India through a series of tie-ups and proposed acquisitions. (Tweet This)

Change in Patterns

The beginning of the ‘Supermarket’ trend was a blessing for all those who sought a one-stop-shop for all their grocery needs under one roof. From fruits to vegetables and grains to meat, you name it and your nearest supermarket has it. Shopping for your favourite groceries in a supermarket is an experience many would find delightful.

Over the last six decades, Walmart has captured this essence in the minds of customers in the US and many other countries. The acceptance of this model is evident from the fact that from just over 200 stores in the 80s, Walmart now has over 10K stores in over 24 countries.

All of this was put to test during the pandemic last year. People’s shopping behaviour changed. The stay-at-home trend forced customers to hop on the e-commerce bandwagon and shop for their favourite groceries online.

eCommerce as a trend was on the rise. The pandemic accelerated it.

Walmart’s online sales growth averaged nearly 80% in 2020.

Return to Normalcy?

Certain aspects of Walmart’s Q1 results indicate that the boost received by eCommerce sales over the last four quarters is on the mend.

Key Stats in Q1:

  • Revenue: $138.3B Vs $131.97B expected
  • Adjusted EPS: $1.69 Vs $1.21 expected
  • Same Store Sales: 6% growth Vs 0.9% expected.

As vaccinations gathered pace in the US, more people shed their hesitancy and headed back to the stores. eCommerce sales grew in the US in Q1 stood at 37%, almost half its 2020 average. The Same Store Sales growth of 6% was also below its 2020 average of 8.6%.

Walmart’s India acquisitions, Flipkart and PhonePe saw strong growth during the quarter. PhonePe’s annualized total payment value run rate grew 150% year-on-year. Flipkart too saw steady growth in Q1. Walmart has expressed its intent to acquire Cleartrip, a leading online travel portal in India. It has also announced a partnership with the Adani Group to expand in areas of logistics and data storage.

Walmart increased its revenue and EPS outlook for FY22 as it expects pent-up demand to last through 2021.

For the upcoming year, it now expects consolidated net sales to grow marginally as compared to its earlier outlook. It also expects EPS growth in high single-digits as compared to its earlier outlook of a decline.

All said and done, the challenge for Walmart to maintain its high growth levels has only just begun.

Market Reaction
WMT ended the day at $141.91, up 2.17%.

Company Snapshot 📈

WMT $141.91 +3.02 (2.17%)

Analyst Ratings (35 Analysts) BUY 77%  HOLD 14%  SELL 09%

 


Newsworthy 📰

Falling: $280 billion wiped off crypto market as bitcoin falls below $40,000 for first time in 14 weeks (COIN -3.72%)

Digital Stores: Shopify stock pops after Google announces online shopping expansion (SHOP +3.37%)

Comeback: GameStop, AMC excitement surges again on Reddit (GME +0.04%)

 


Later Today 🕒

  • Cisco Inc. Earnings (CSCO)
  • Lowe’s Companies Inc. Earnings (LOW)
  • Target Corporation Earnings (TGT)
  • 11:30 PM IST: Fed Minutes

Fun Fact of The Day 🌞

The name Virgin was suggested to founder Richard Branson by a friend who claimed they were complete virgins at business


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