How Did Walmart, Target, and NVIDIA Fare in Q3?

This week’s quarterly earnings reports have surely given investors and traders a lot of information to chew on following a tumultuous Q3 2022. Let’s take a more in-depth look at what Walmart, Target, and NVIDIA had to reveal to the public this week regarding the state of their bottom lines:

Walmart’s Surprise

The largest retailer in the United States has been getting a boost from the record inflation figures that have been dominating financial news headlines for much of this year. Walmart’s (WMT) earnings call on Tuesday beat market expectations in a big way.

With the steep jumps in consumer prices putting pressure on Americans’ pocketbooks, many of them seem to have been turning to lower-cost options for their basic, everyday needs. With groceries making up more than half of Walmart’s core business, the massive big-box chain reported on November 15th that sales from those of its stores that have been open for more than a year have grown at an annualised rate of over 8%, perhaps bringing some much-needed optimism to investors.

Market watchers had not been expecting such strong growth from Walmart, and one interesting factoid revealed on Tuesday was that even higher-income households have been flocking to Walmart’s grocery shelves to seek respite from food price increases that have hit double-digits in 2022. Sales of Walmart-brand food lines proved especially popular in the third quarter, showing that American consumers may be seeking to cut costs wherever they can. 

On the other hand, sales growth among non-essential goods was weaker, leading the United States’ top retailer to sharply reduce prices in order to clear inventory. Even so, inventory is still up by more than twelve percent from a year ago. 

The business environment in the United States may have been less than rosy for much of this year, but Walmart’s earnings per share (EPS) figure for the third quarter of 2022 beat expectations by 18 cents to come in at $1.50. Total revenue, likewise, was beyond what market experts had predicted, reaching over $152.8 billion. On the back of these strong numbers, Walmart shares rose by 0.7% on Wednesday. (Source:CNBC)

Target Misses the Bullseye

Another of the biggest names in the U.S. retail sphere, Target (TGT), may have come away from its Tuesday earning release a little less shiny than Walmart. Affected by ubiquitous inflation, sales across Target’s chain of stores declined over the course of the third quarter.

Target is having to cut operating costs across the board, and although progress has been made in reducing excess inventory, the latter is still up by double digits compared to Q3 2021. Target shoppers have been proving reluctant to shell out for full-priced items, and compared to last year’s third quarter, the firm’s net income has fallen by about fifty percent, bringing Q3’s EPS figure to $1.54 compared to over $3 a year ago. However, revenue for the third quarter rose by over 3% to more than $26.5 billion.

Much as with Walmart, Target’s groceries and proprietary brands saw some strong sales growth. However, the company’s own executive suite foresees a somewhat challenging holiday season for the firm going into the fourth quarter of 2022. On Wednesday, Target shares dropped by over 13%, so whether investor confidence in the company will return over the near-term is far from certain at this point. 

NVIDIA Shows Tech Industry’s Strain

The tech industry has been struggling against strong economic headwinds so far in 2022 as a volatile market environment draws traders and investors alike away from tech and growth stocks. Accordingly, all eyes were on NVIDIA (NVDA) yesterday ahead of its Q3 earnings report. 

NVIDIA’s status as an important node in the tech industry leads some to consider the health of its business as a bellwether for the sector as a whole since it provides essential chips to firms across the globe. NVIDIA’s revenue dropped by 17% compared to the third quarter of last year, and gross margin dropped by nearly an eighth as demand for chips has been on the decline.

Q3 2022’s earnings per share figure undercut expectations to come in at $0.58, but revenue proved to be a pleasant surprise at $5.93 billion for the quarter. However, NVIDIA CEO Jensen Huang reiterated to the public that the firm is still in the process of adjusting itself to the shifting sands of the current business environment. While chips may be less in-demand than previously due to a post-pandemic slowdown in the gaming industry, NVIDIA’s data centre business grew in sales by nearly a third over the past year. NVIDIA shares showed a decline of just under 4.5% yesterday, but how the firm will fare over the course of the fourth quarter of 2022 is unclear.

Clearly, American firms across a plethora of sectors are still struggling to adapt their business models to the volatile, high-inflation environment prevalent at home and abroad at the moment. Who the biggest winners and losers will be in the months to come is still up in the air.