Stocks mostly moved sideways Thursday. Major benchmarks like the Dow Jones Industrial Average (DJINDICES:^DJI) and the S&P 500 (SNPINDEX:^GSPC) were in the red for much of the session, but rose in the afternoon to finish close to even. Real estate was the strongest sector.
Today's stock market
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Growth is still strong at Walmart
Walmart reported stronger-than-expected profit growth on sales gains in the U.S. in the third quarter, and the stock, after initially opening higher, closed down 0.3%. Revenue increased 2.5% to $128 billion, which was just slightly below the analyst consensus estimate. Adjusted earnings per share rose 7.4% to $1.16, beating expectations for $1.09.
Comparable sales at Walmart U.S. grew 3.2%, with 1.7 percentage points of that gain resulting from a 41% increase in e-commerce sales. Revenue at Walmart International rose 1.3%, or 4.8% in constant currency terms. Sales at Sam's Club were up 0.7%, but excluding fuel and tobacco, comparable sales grew 4.1%.
Looking forward, Walmart is maintaining its assumptions about Q4, but boosted full-year EPS guidance from "down slightly to up slightly" to "up slightly," which is consistent with the analyst consensus.
Overall, the retail giant's report had few surprises, but it did confirm that spending by U.S. consumers continues to be strong and that the company is successfully mitigating the effects of tariffs.
Slow recreational marijuana sales hit Canopy Growth
Canadian cannabis producer Canopy Growth reported dreadful fiscal second-quarter results, sending shares down 14.4% and putting pressure on marijuana stocks more broadly. Gross revenue from the sale of marijuana managed a slight increase of 2% from last quarter to 94.7 million Canadian dollars, but after some adjustments to revenue, fell 15% sequentially to CA$76.6 million. The company lost CA$1.08 per share ($0.81), compared with Wall Street's expectations for a loss of $0.27 per share.
CEO Mark Zekulin was blunt about in the conference call, saying about Canadian recreational marijuana, "The market opportunity today is simply not living up to expectations." Zekulin put the blame on the Ontario government, and said its inability to license retail stores has resulted in "half the expected market in Canada simply not existing."
Canopy has responded by lowering the price of softgels and oils by 5% to 7% and took restructuring and inventory charges that reduced gross margin by $40.4 million.
Company officials expressed optimism about the long-term outlook for its markets and plans to continue investing in growth, but analysts on the call were concerned about whether the worst was over yet in the short term and questioned the company's growing expenditures.