Big-box retailers are crushing earnings season.
Shares of Walmart and Home Depot both hit all-time highs Tuesday after the companies blew past analysts' earnings expectations. Their stocks cooled off later in the session. Walmart delivered its biggest earnings surprise in 31 years with a 97% increase in e-commerce sales for the fiscal second quarter. Home Depot's quarterly sales jumped 23%.
Market commentators including CNBC's Jim Cramer recommend playing the space strategically.
Here's what four of them said Tuesday:
Bill Simon, former president and CEO of Walmart, applauded the retailer's results:
"It really is an indicator that the consumer is still there and once we sort through all this Covid stuff, they're willing to spend. I'm particularly impressed by their operating income. I've been watching that for several years and it's been challenged as they move their business to digital, to e-commerce, and we see that big growth. Operating income's been under pressure, but they grew their operating income almost 9%, and even adjusted for currency, in the mid-teens. I mean, that's phenomenal."
Cramer, the host of "Mad Money," said retailers might exhibit more caution from here on out:
"I think that they're all going to be a little more cautious and circumspect just because there was a big check that everybody got and a lot of that money was spent at these stores and they're going to be able to say that it's elevated and you're not going to see that again. I think that what you have to do is step back and say, 'Alright, let them come in. Let them sell the stocks.' The fact is that these companies … are the winners. And while they were doing these numbers, they wiped out a lot of the little guys. So, the competition's going to be far less. It was not their goal, just like it wasn't Domino's Pizza's goal to hire 20,000 people and wipe out the little guys. But you're going to see good numbers for these guys for the rest of the year, so do not bite on the idea that this is it, they're over and they're coming down. Wait till they come down and then do some buying."
Brian Nagel, senior analyst at Oppenheimer, said Home Depot's results were some of the best he'd ever seen:
"Look, I would say this, and I've followed Home Depot now for 20 years, 20+ years. I've never seen a quarter like this. This is a 25% comp for a $100 billion company. So … just last week or early this week I raised my numbers to what I thought was a high 12-14%. All the data we've seen, we spent a lot of time in these stores, but still, just the thought of Home Depot putting up a 25% comp is absolutely amazing."
Charlie O'Shea, retail analyst at Moody's, said Walmart was giving e-commerce powerhouse Amazon a run for its money:
"Every quarter it looks like they're running on all cylinders and now the engine just keeps getting bigger. We've gone from an eight-cylinder engine to a 12-cylinder engine and with the e-commerce business humming the way it is and the way the companies have been able to integrate it with the store base with curbside and everything else, this is a tough one. This is really setting a high bar for brick-and-mortar retail and it's giving Amazon something to really think about. I've said for a long time that I frame the question of 'How does Amazon compete with Walmart?' not 'How does Walmart compete with Amazon?' and I think with almost doubling of online revenue for this quarter, we're starting to see this battle really escalate."