By Anthony J. Bauer – Head of Private Equity at Hennessy and Associates
The largest microchip manufacturer in the U.S., it recently beat its 2nd Quarter goals despite concerns of a demand slowdown in smartphones and PCs markets. The company is increasing its long-term agreement pipeline, focussing on expanding its single-source business, and there IS expected to be growth in profitable unit volume with lower capital which should see this stock rise in price, especially since the company has shown its ability to “weather a macro/sector-specific slowdown while delivering continued increases in profitability driven by ASP growth, new single-sourced DWINs, and disciplined cost & OpEx management.”
Walmart recently released its quarterly results, which reflected the resilience and confidence that consumers have showed during these unpredictable market conditions. Also, the company has made some operational improvements, it has continued with the scaling of alternative income streams, and implemented an innovative growth strategy. The company’s progress in optimizing inventory is a plus, and additional pricing actions planned for the next quarter will help the company to achieve the right-size inventory levels/mix, while its current leadership’s efforts to keep Walmart ahead of its competitors should generate real momentum in the business at a time when many traditional retailers are failing.
This is an industry leader among its peers, another company that has delivered upbeat 2nd Quarter results despite the economic climate. The company has not changed its outlook for the rest of the year, which means that it expects some protection from any significant change in price-related demands, and I also believe that the company’s strategic investments – such as a front-end redesign and improved in-store navigation, various merchandising resets, and an online assortment expansion – will bear fruit in the near- to medium-term.