October 14, 2015

On Wednesday, the S&P 500 fell 0.5% while Toronto rose 0.2%

Walmart announced that its earnings per share would fall 6 to 12% in the fiscal year that begins in February due to previously announced wage increases. On that news the stock fell 10%.

The Walmart earnings news release was poorly handled by the company and I have the following concerns:

  1.  The press release title was “Walmart strategy drives growth and sustainable returns…” The part about the earnings decline was buried in the middle of the release. I consider that to border on misleading and to just generally be a poor way of communicating.

2. The news was released during an institutional investment conference in the middle of the trading day. The trading in the minutes after the release clearly shows that some people were lucky enough to sell early before the news was fully reflected in the stock price. That is unfair since it easily have been avoided by releasing the news before the market opened.

However, overall the market may be over reacting here. I bought 100 Walmart shares after the decline.

Other stocks on the move today included Valiant up 5.6% and Toll Brothers down 2.3%.

Wells Fargo released Q3 earnings with earnings per share up 3% which is not bad considering that lower interest rates have been a drag on earnings.

This evening, Valiant released a press release titled “update regarding government inquiries”. It stated that valiant had responded to a letter from a Senator and also revealed that Valiant had been subpoenaed for documents from the attorneys general of New York and Massachusetts. The response to the Senator also appears to indicate that some of the recent drug price increases would be refunded to certain hospitals. (They said they were “beginning outreach to hospitals where the impact of a price change was significantly greater than the average.” — I guess they have not heard of plain language. ) I would take all this as not surprising but mildly negative news.