Walmart (WMT) made significant announcements this week that resonated with investors, propelling its shares to a new all-time high on February 20. The retail behemoth exceeded expectations with its fourth-quarter earnings report, prompting a positive response from the market. In addition to its strong financial performance, Walmart announced a substantial increase in its annual dividend payout. Furthermore, the company made headlines with its acquisition of smart-TV manufacturer Vizio for $2.3 billion, signaling its strategic expansion into the consumer electronics market.
“We’re proud of the team and excited about building on our momentum as we work to bring prices down for our customers and members,” remarked Doug McMillon, president and CEO, expressing Walmart’s enthusiasm for its recent achievements. The company reported adjusted earnings of $1.80 per share for the three months ending in January, marking a 5.3% increase from the same period the previous year. This figure notably surpassed the Wall Street consensus forecast of $1.65, underscoring Walmart’s strong performance.
Walmart’s revenue showed robust growth, increasing by 5.7% from the previous year to reach $173.4 billion. This figure exceeded analysts’ estimates, which had projected revenue of $170.71 billion. In addition, U.S. same-store sales saw a significant uptick of 4%, outpacing Wall Street’s forecast of 3.2%.
E-commerce growing
CEO Doug McMillon emphasized the strategic significance of the Vizio acquisition, highlighting its potential to enhance customer reach and advertising capabilities. Looking ahead to the next fiscal year, Walmart provided a positive outlook, forecasting earnings per share in the range of $6.70 to $7.12 and anticipating a 3% to 4% increase in net sales.
Analysts anticipated Walmart to report full-year earnings of $7.06 per share on $671.5 billion in revenue, according to FactSet.
Walmart’s global eCommerce sales surged by 23%, surpassing $100 billion for the first time. In the U.S., e-commerce increased by 17%, driven by customer preferences for curbside pickup and home delivery.
Chief Financial Officer John David Rainey highlighted the improvement in e-commerce profitability within the Walmart U.S. segment, attributed to lower fulfillment costs and optimization of the last-mile delivery process. Rainey emphasized the strategic advantage of Walmart’s store proximity to customers.
Real Money columnist Stephen Guilfoyle observed Walmart’s continuous evolution to remain competitive in the retail landscape. He noted the growth of Walmart’s eCommerce business, which is expanding faster than Amazon’s online retail segment.
Guilfoyle expressed positive sentiments toward Walmart but raised concerns about the company’s balance sheet discipline. Despite his previous bullish stance on Walmart, he refrained from investing further due to these reservations.
Walmart taking market share
After Walmart released its results, several analysts adjusted their price targets for the company.
Morgan Stanley analyst Simeon Gutman increased the firm’s price target on Walmart to $200 from $168, maintaining an overweight rating on the shares.
Gutman suggested that the company’s broader-than-normal guidance reflects additional conservatism following a third-quarter miss, providing a cushion throughout fiscal year 2025. He also noted the potential for gross margin upside if general merchandise sales accelerate.
Piper Sandler also raised its price target on Walmart, from $210 to $228, while retaining an overweight rating. The firm emphasized Walmart’s strong fourth-quarter performance and expressed bullishness regarding commentary on the non-retail profit and loss statement and share gains.
Piper highlighted Walmart’s expectation that advertising membership income will comprise 20% of fiscal year 2025 EBIT, indicating positive momentum in the marketplace and Walmart’s effective use of value and convenience to capture market share. Ultimately, Walmart remains one of Piper’s favorite ideas in its coverage.
