The Week Ahead: Home Depot, Walmart, and Target to Report Earnings

Earnings season continues to roll on throughout August, and for the week ahead we expect to see reports from Home Depot HD and Walmart WMT on Tuesday. On Wednesday, we expect Target TGT and NVIDIA NVDA to report earnings.

The Home Depot is the world’s largest home improvement retailer, supported by its evolving distribution network and a stable housing market. Even if existing-home sales and turnover decelerate, the wide-moat company remains in a comfortable position in the consumer cyclical sector. Devoted to better merchandising and an efficient supply chain, it is possible Home Depot could deliver more than $115 billion in revenue in 2020. Following the shelter-in-place restrictions, there has been an increase in housing-related projects and other do-it-yourself experiences, which are areas the company has successfully adopted as a part of its brand.

A broad store network and considerable cost leverage are a couple of the core advantages Walmart has in the consumer defensive sector. These advantages also set up the wide-moat company as a worthy opponent in retail to compete head-to-head with Amazon.com AMZN. Walmart’s prospective program and rival to Amazon Prime, Walmart+, is alleged to include same-day grocery delivery, fuel discounts, early access to sales, and entertainment offerings at a lower annual fee.

Target’s growth was comparable to that of Walmart last quarter, which we believe was a result of stimulus checks and customers returning to discretionary and apparel categories. The no-moat company has also managed to handle the increase of digital orders. Overall, we anticipate that the pandemic’s long-term effects will not have a great impact here.

Because of increased work-from-home, learn-from-home, and gaming trends, NVIDIA exceeded our expectations in the first quarter. We expect its momentum to continue in 2020, especially in light of the narrow-moat company’s new product launches and Mellanox acquisition.