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- 🗞️ Walmart Tanks On Earnings Miss
🗞️ Walmart Tanks On Earnings Miss
PLUS: Why Coty fell over 21%
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Market Performance
S&P 500: 6,370.17 (⬇️ 0.40%)
Nasdaq: 21,100.31 (⬇️ 0.34%)
Dow Jones: 44,785.50 (⬇️ 0.34%)
Walmart Hikes Outlook Despite Tariff Headwinds
Walmart (WMT) delivered a mixed earnings report on Thursday that perfectly captures the current economic tension between growth and inflation pressures.
The retail giant raised its full-year outlook despite missing earnings expectations for the first time since May 2022, as tariff-related costs continue mounting.
The company now expects net sales growth of 3.75% to 4.75%, up from previous guidance of 3% to 4%.
This optimism stems from robust e-commerce performance, with online sales jumping 26% in the U.S. and global advertising revenue surging 46%.
Walmart's digital transformation continues paying dividends, as the company doubled its e-commerce profitability quarter-over-quarter.
However, the earnings miss highlights real challenges. CFO John David Rainey acknowledged that "tariff-impacted costs are continuing to drift upwards," forcing selective price increases despite the company's scale advantages.
CEO Doug McMillon noted that middle- and lower-income households are more sensitive to these price hikes, particularly in discretionary categories.
What's particularly telling is Walmart's diverging performance from Target, which continues struggling with sales declines.
This suggests successful retailers can still thrive by leaning into value positioning and delivery innovation, even as tariff pressures intensify.
We can see that while Walmart stock is fundamentally strong, it has a Ziggma score of 50 and ranks in the bottom percentile in terms of valuation.
Our Takeaway
Walmart's ability to raise guidance while absorbing tariff costs demonstrates the power of scale and operational excellence.
However, the earnings miss and management's cautious tone on cost pressures signal that even the strongest retailers aren't immune to macroeconomic headwinds.
Investors should watch how successfully Walmart balances pricing power with its value reputation in the coming quarters.
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Market Overview
Stocks extended their losing streak on Thursday, with the S&P 500 falling for a fifth consecutive day as investors await Federal Reserve Chair Jerome Powell's Jackson Hole speech later today.
The broad selloff reflects mounting concerns about persistent inflation and elevated stock valuations heading into the Fed's annual economic symposium.
Technology stocks continued their heavy selloff that has pressured markets all week, with investors taking profits from high-flying names including Nvidia, Palantir, and Meta Platforms.
The sector's weakness serves as a reminder for investors to maintain balanced portfolios, according to UBS strategists who noted that "the AI rally is now prone to more volatility."
Economic data painted a mixed picture, with jobless claims rising to 235,000 - higher than the 225,000 expected and the highest level since June.
The Philadelphia Fed's manufacturing index unexpectedly contracted to -0.3 from 15.9, missing estimates of 7.0.
Meanwhile, July home sales rose 2% as housing inventory reached its highest level since May 2020.
Fed funds futures are pricing in a 74% likelihood of a September rate cut. Still, elevated valuations and high expectations for dovish signals from Powell could trigger disappointment selling if the Fed Chair fails to deliver clear hints about imminent easing.
Stock Moves Deciphered 📈
Palantir (PLTR)
The defense technology stock struggled near flat but tracked for its worst week since April, down around 12%. Despite recent weakness, PLTR remains up over 100% year-to-date as investors reassess AI valuations.
Xpeng (XPEV)
The Chinese electric vehicle maker jumped 14% after CEO Xiaopeng He purchased 3.1 million shares through Galaxy Dynasty Limited. The stock has gained 17% this week following better-than-expected Q2 revenue.
Paramount (PSKY)
The media giant surged 15%, adding to month-to-date gains exceeding 25% after its Q2 streaming division posted unexpected profit, demonstrating successful turnaround efforts in the competitive streaming landscape.
Headlines You Can't Miss
Solar stocks, including FSLR and ENPH, plummet after Trump says U.S. won't approve solar or wind power projects, with Invesco Solar ETF down 3.4%
Fed minutes reveal policymakers worried about the labor market and inflation, with two governors dissenting for the first time since 1993.
Australia's ASX 200 breaks 9,000 threshold for first time, rising 1.13% to record high of 9,019.
Japanese 20-year bonds hit a 26-year high yield of 2.645% while 10-year yields reached a 17-year high of 1.61%.
Retail investor sentiment remains bearish for the 38th week out of the past 40, with 44.8% expressing pessimism according to AAII.
Trending Stocks
Intuit (INTU) shares dropped roughly 6% despite beating fiscal fourth-quarter expectations with adjusted earnings of $2.75 per share versus $2.66 expected and revenue of $3.83 billion versus $3.75 billion expected.
The financial technology company's stock decline reflects broader market weakness affecting even strong earnings performers.
CEO Quote🎤: “We had an exceptional fiscal 2025 with 20 percent growth in the fourth quarter and 16 percent growth for the full year.”
Workday (WDAY), the human resources software stock, slid nearly 6% after providing third-quarter guidance that met but didn't exceed expectations.
The company expects subscription revenue of $2.24 billion and adjusted operating margin of 28.0%, just slightly below the 28.1% consensus estimate.
CEO Quote🎤: “Workday delivered another solid quarter, driven by our AI and platform innovation, international momentum, and an ecosystem that continues to grow alongside us.”
Coty (COTY), the beauty retailer, saw its stock plunge over 20% after forecasting a weak first half of fiscal 2026 with declines in both sales and profit.
While Q2 revenue of $1.25 billion beat the $1.20 billion estimate, the company posted a 5-cent loss per share versus 2-cent earnings expectations.
CEO Quote🎤: “From FY21 through FY25, we delivered best-in-class 10% net revenue CAGR in Prestige fragrance sales and 2% net revenue CAGR in Consumer Beauty sales, strong profit expansion, and a 3x reduction in our leverage, contributing to 12 rating-agency upgrades.”
What’s Next?
Key Events to Watch 👇
Fed Chair Powell's Jackson Hole speech today could provide rate cut signals.
Nvidia earnings are due next week as investors scrutinize the sustainability of AI spending.
Economic data, including consumer confidence and GDP revisions.
Continued monitoring of tariff impact on corporate earnings guidance.
Track upcoming news and earnings on your portfolio companies with Ziggma.
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