Value-oriented shoppers are flocking to Walmart’s stores to generate a 5.7% revenue rise during the most-recent quarter.
A cost-cutting plan will help grow earnings with new services improving customer satisfaction as well.
The stock trades at 24.7 times the company’s 2023 earnings forecast.
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WALMART INC. (New York symbol WMT) is the world’s biggest retailer, with 10,482 outlets in 24 countries.
Walmart continues to benefit as inflation draws more shoppers to its value-focused stores, particularly for groceries and health products. That offset its slower sales of apparel and sporting goods.
The company also continues to automate its warehouses and stores in response to rising labour costs. It expects automated fulfillment facilities will handle 55% of its volumes by the end of its 2026 fiscal year, ending January 31, 2026.
The plan should cut the cost of moving goods (on a per-unit basis) by 20%. It should also improve in-store inventory levels and speed up home delivery service.
Blue Chip Stocks: Both revenues and earnings beat the consensus estimates for Walmart
In the fiscal 2024 second quarter, ended July 31, 2023, sales rose 5.7%, to $161.63 billion from $152.86 billion a year earlier. That beat the consensus forecast of $159.3 billion.
Walmart’s U.S. same-store sales (including online) rose 6.4%, reflecting higher selling prices (up 3.4%) and a higher number of transactions (up 2.9%). As well, U.S. online sales improved 24%.
The company is also benefiting from lower supply-chain costs and fewer discounts to clear its unsold inventory. If you factor out gains and losses on investments and other unusual items, earnings per share rose 4.0%, to $1.84 from $1.77. That also topped the consensus estimate of $1.71 a share.
The retail giant now expects its sales (excluding businesses it recently sold and currency rate fluctuations) for all of fiscal 2024 to rise between 4.0% and 4.5%. It should also earn between $6.36 and $6.46 a share, and the stock trades at 24.6 times the midpoint of that range. That’s an acceptable p/e in light of its high market share and fast-growing online business.
With the April 2023 payment, Walmart raised your quarterly dividend by 1.8%. Investors now receive $0.57 a share instead of $0.56. The new annual rate of $2.28 yields 1.4%.
Including this latest increase, Walmart has now raised the annual dividend rate each year for the past 50 years. Over the past five years, that payment has increased at an average annual rate of 1.9%. The stock holds a Highest TSI Dividend Sustainability Rating.
Recommendation in Wall Street Stock Forecaster: Walmart Inc. is a buy.