over 2 years ago • 3 mins
Walmart reported better-than-expected quarterly earnings on Tuesday, as the US retailer’s loyal customers kept coming back – whether they wanted to or not.
What does this mean?
Shortages of supplies and workers have been pushing up costs around the world, and retailers like Walmart have duly been upping their prices to offset them. And since the company sells products customers need no matter what, it’s in a great position to do just that. That might be why revenue from its existing US stores climbed 9.2% last quarter compared to the same time a year ago – the fastest growth since the second quarter of 2020. Walmart said the current quarter is off to a good start too: shoppers have already started buying holiday gifts in a race to beat shipping delays, which might be why the firm increased its sales outlook for the rest of the year.
Why should I care?
The bigger picture: America’s still spending.
Another major US retailer posted impressive quarterly results of its own on Tuesday: Home Depot’s revenue from existing stores rose by a better-than-expected 6.1% versus the same time last year. Such a strong showing from two of America’s biggest retailers is a good sign, suggesting the country’s still willing to spend even with prices on the up and up. And given that consumer spending is the biggest driver of US economic growth, Tuesday’s results could bode well for the country as a whole.
Zooming out: Santa’s come early.
That’s not the only sign that consumer spending is moving in the right direction: data out on Tuesday showed that US retail sales climbed by a higher-than-expected 1.7% in October versus the month before. That’s the third consecutive month of increases, and the biggest jump since March. But economists are reserving judgment: they, like Walmart, think the momentum’s just a result of early holiday shopping.
Keep reading for our next story...
Germany’s Thyssenkrupp is thinking about listing its hydrogen business Uhde on the stock market, as if to prove that the gas really is greener on the Uhde side.
What does this mean?
Uhde – which is 66% owned by conglomerate Thyssenkrupp – builds plants that use renewable energy to produce hydrogen, which can then be fed into fuel cells to generate emission-free electricity. The gas can likewise be used to replace fossil fuels in industrial applications, like the manufacturing of steel and cement.
All that fits snugly into an increasingly eco-conscious landscape, and explains why there’s growing investor interest in Uhde’s hydrogen-based technologies. So Thyssenkrupp is looking to capitalize: the initial public offering – which could come as soon as the first quarter of next year – stands to value Uhde at as much as $5.7 billion.
Why should I care?
For markets: The “conglomerate discount” in action.
If Uhde lists at $5.7 billion, that would make Thyssenkrupp’s 66% stake in the company worth $3.8 billion. But Thyssenkrupp itself was worth $6.5 billion before the news broke, which implies investors were valuing the rest of its business at just $2.7 billion. Consider, then, that the rest of the business generated 99% of Thyssenkrupp’s revenue last year, and you realize investors have been valuing the conglomerate at far less than the sum of its parts. No wonder they sent Thyssenkrupp’s stock up 12% after the news…
The bigger picture: More clean energy, please.
Interest in hydrogen is about more than just sustainability: this year’s surge in natural gas and oil prices has brought the need for diversified energy sources into even sharper focus. Especially given that the surge doesn’t look like it’s going to drop off any time soon, with Trafigura – one of the world’s biggest oil trading firms – saying on Tuesday that it’s expecting the price of oil to climb from around $80 a barrel nowadays to $100 in the long term.
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