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Two Giants Go Shopping

Walmart, Capital One, Home Depot

Good Morning! 👋

Happy Tuesday! Let’s have a good one:

👉 Walmart acquires Vizio

👉 Capital One acquires Discover

👉 Home Depot earnings are in

WALMART: Acquires Vizio

Walmart has acquired TV manufacturer Vizio for $2.3 billion to enhance its advertising business, announcing the deal with its fourth-quarter earnings. Following rumors of the acquisition, Vizio's stock surged 15% in pre-market trading. Walmart aims to utilize Vizio's SmartCast Operating System to expand its ad revenue through streaming content.

Source: Walmart

The purchase is part of Walmart's broader strategy to grow its high-margin Walmart Connect media segment, competing with Amazon's ad business. With Vizio's 18 million active SmartCast accounts, Walmart expects to broaden its advertising reach and innovate in TV and home entertainment. The company also reported a 6% revenue increase in the last quarter, driven by strong holiday sales and e-commerce growth.

Earnings:

  • Earnings per share: $1.80 adjusted vs. $1.65 expected

  • Revenue: $173.39 billion vs. $170.71 billion expected

🎯 GRIT TAKE: This is a huge acquisition for….Upgrade to GRIT VIP to read the full GRIT Take!

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DISCOVER: Acquired By Capital One

Capital One Financial is set to acquire Discover Financial Services in a strategic $35.3 billion all-stock merger. Discover shareholders are to receive a 26% premium with 1.0192 Capital One shares for each Discover share. Expected to be finalized by late 2024 or early 2025, this deal will see Capital One and Discover shareholders owning 60% and 40% of the merged entity, respectively.

Source: American Banker

This brings together two of the U.S.'s largest credit card issuers, aiming to enhance Capital One's card offerings and deposit base while maintaining the Discover brand. The acquisition occurred amid regulatory challenges for Discover and followed the recent appointment of Michael Rhodes as CEO in December 2023.

With Discover's market cap at $27.63 billion and Capital One's at $52.2 billion, this merger marks one of the year's largest deals.

EARNINGS: Home Depot

Home Depot shares fell Tuesday after the company reported better-than-expected fiscal fourth-quarter net sales but missed U.S. same-store sales targets and provided a pessimistic outlook for the full year. Despite this, Home Depot exceeded profit forecasts and increased its quarterly dividend by 7.7%. Quarterly net income dropped to $2.8 billion, with net sales declining 2.9% to $34.79 billion, slightly above expectations.

Source: CNBC

However, same-store sales fell more than anticipated, with a 3.5% overall decrease and a 4.0% drop in U.S. stores. For the next fiscal year, Home Depot anticipates only a 1% growth in earnings per share, below the expected 3.0%, and a modest 1% sales increase. Additionally, the company raised its quarterly dividend to $2.25 per share, offering a higher dividend yield compared to its competitor, Lowe's, and the S&P 500 average.

Headlines You Need To Know: 🎙

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Chart of the Day

📊 Market Value of 10 Largest Companies

Source: JP Morgan

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