Walmart : Profitable #1 US Retailer. Buy !
In this earning season reporting, $Wal-Mart(WMT)$ has beaten its quarterly earnings and revenue estimates.
The discounter made significant e-commerce gains, drove profits with newer businesses like advertising and won over more high-income shoppers.
Q1 2024 earnings.
Below is Walmart’s reported earnings for the tending 30 Apr 2024 versus Wall Street expected, according to a survey of analysts by LSEG:
Earnings per share: $0.60 adjusted vs $0.52 expected.
Revenue: $161.51 billion vs $159.50 billion expected.
Net income: $5.10 billion vs $1.67 billion. that is a +305.39% gain YoY.
FY 2024 Forecast.
Equally important, Walmart said it now expects to hit the high-end or slightly top its previous full-year guidance.
Walmart expects:
Net sales growth of 3% to 4%.
Adjusted earnings per share of between $2.23 and $2.37.
As US’s largest retailer and private employer, Walmart is often viewed as a bellwether for the US economy.
Truth be told, it has generally fared better during an inflationary period than other retailers.
This is because it sells staples like groceries and has a value-oriented reputation.
One of the many factors boosting Walmart’s grocery business is the widening gap between the price of cooking at home and buying food at fast-food chains or restaurants.
Additionally, shoppers especially higher incomes ones– appreciate the convenience that Walmart offers.
To ensure success and retain the more affluent households, Walmart recently launched a new private-label grocery brand, that includes bolder flavors, plant-based items and more.
For the first time, its delivery business surpassed its store pickup in terms of volume.
Customers - regulars or new ones are visiting Walmart more frequently be it online or at its brick-and-mortar stores.
New Businesses.
US Walmart’s e-Commerce sales shot up by +22% YoY.
This was fueled by store pickup and delivery of online orders, as well as company’s growing third-party marketplace.
Walmart is looking beyond retail to drive profits higher and fend off rivals like $Amazon.com(AMZN)$ .
It has introduced things like (a) advertising and (b) subscription-based membership program - Walmart+.
These new initiatives have lifted profits during the quarter and contributed to its operating income growth outpacing its sales growth.
Walmart’s global advertising business grew +24% during the quarter, including +26% growth for the US market segment.
CFO John David Rainey said 33% of the company’s YoY operating income gains came from the newer businesses.
Walmart further showed how keen they are to make more ad revenue, by acquiring Vizio, a smart TV company, for $2.3 billion in February 2024.
Stock Price Movement.
Shares of Walmart closed on Wednesday at $59.83, bringing the company’s market share to $482.22 billion.
As of Wednesday’s close, the company’s stock is up nearly 14% YTD, surpassing the roughly 11% gains of $S&P 500(.SPX)$ during the same period.
With the latest CPI inflation cooling in April 2024, does this signal better days are ahead for Walmart?
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Do you think Walmart is one of the must have / go to stock in any investor’s portfolio?
Do you think other retailers like $Costco(COST)$ and $Target(TGT)$ are fair competitors for considerations ?
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Very Strong Forecasts.
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