Last year, Walmart Inc. (NYSE: WMT) performed better than most other retailers, benefitting from its growing omnichannel capabilities and competitive prices, despite consumer spending coming under pressure from high inflation. After making a late entry into e-commerce, the company has been making significant progress in that area, lately.
The Arkansas-headquartered retail behemoth’s stock made strong gains ahead of the Q4 earnings and climbed to an all-time high soon after the announcement. Having grown about 22% since the beginning of 2024, it is a relatively expensive stock.
The Stock
While WMT remains an attractive long-term bet due to its strong fundamentals and regular dividend hikes – the current yield is 1.4% — it would be a good idea to wait until the upcoming stock split before investing in the stock. Adding to investors’ confidence, the company has shown exceptional resilience to various business challenges including the pandemic. However, the current valuation is high.
The company’s sales increased across all operating segments and geographical divisions in Q4, but its domestic same-store sales growth decelerated for the fourth time in a row. After expanding the grocery pick-up facility to almost all major Walmart stores, the retailer is all set to open new stores and remodel many of the existing stores this year. The company has made great strides in the advertising business after launching its retail media network.
Q4 Results Beat
At $173.4 billion, Walmart’s fourth-quarter revenues were up 5.7% year-over-year and well above analysts’ estimates. US same-store sales growth slowed down to 3.7% from 4.7% in the prior quarter.
Adjusted earnings increased to $1.80 per share in Q4 from $1.71 per share in the corresponding period of 2023. Earnings topped experts’ projections. On an unadjusted basis, net profit came in at $5.49 billion or $2.03 per share, compared to $6.28 billion or $2.32 per share a year earlier. The company has a good track record of delivering stronger-than-expected quarterly numbers.
Commenting on the results, Walmart’s CEO Doug McMillon said at the earnings call, “We were strong in the U.S., Mexico, Canada, and India, where we had the best Big Billion Days ever, and we continued the strong performance in China with the start of Chinese New Year. Typically, we see some of our customer experience scores dip during the high-volume hours and days we experience during the holidays. But during Q4, the Walmart U.S. team delivered three-year high customer scores in our stores for pickup and delivery from stores and for those orders that flow directly from our e-commerce fulfillment centers.”
Continuing their pullback from the post-earnings highs, Walmart’s shares traded lower on Wednesday but stayed above the long-term average.