Walmart’s growth forecasts remain strong

walmarts growth forecast remain strong

Higher selling prices led to a 2.4% revenue bump for this company during the most-recent quarter.

The company also expects cost pressures will ease as it cuts jobs and reduces excess inventories.

Meanwhile, the stock trades at 18.9 times the company’s 2022 earnings forecast.

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WALMART INC. (New York symbol WMT) is the world’s biggest retailer, with 10,585 outlets in 24 countries.

In August 2018, the company acquired 77% of Flipkart Group for $16 billion. Flipkart is a leading online retailer in India, with annual sales of roughly $4.5 billion.

Flipkart plans to sell shares to the public through a listing on a U.S. exchange. It originally planned the IPO for 2022 but will probably wait unit 2023.

That delay will give Flipkart more time to improve the profile of its two new businesses—online healthcare services and travel bookings. Russia’s invasion of Ukraine has also added to the current volatility in stock markets, which may depress interest in the IPO.

An IPO could value Flipkart at $70 billion and increase the value of Walmart’s stake to roughly $54 billion. That’s equal to 16% of its current market cap of $335.4 billion. Walmart could eventually sell those shares to raise funds for other projects, or hand them out to its own investors as a special dividend.

With the April 2022 payment, Walmart raised your quarterly dividend by 1.8%. Investors now receive $0.56 a share instead of $0.55. The new annual rate of $2.24 yields 1.8%.

The stock dropped nearly 20% after the company reported lower-than-expected quarterly earnings due to rising costs for products, fuel and labour.

Blue Chip Stocks: Earnings fall but sales forecasts strengthen

In the fiscal 2023 first quarter, ended April 30, 2022, sales rose 2.4%, to $141.57 billion from $138.31 billion a year earlier. That beat the consensus forecast of $138.0 billion.

Walmart’s U.S. same-store sales (including online) rose 3.0%. That’s entirely due to higher selling prices as the number of transactions were unchanged in the quarter. U.S. online sales also improved 1%.

If you factor out unusual items, earnings per share fell 23.1%, to $1.30 from $1.69. That missed the consensus estimate of $1.48.

The retail giant now expects its sales for all of fiscal 2023 will rise between 4.5% and 5.0%, which is better than its previous forecast of 4% growth.

Walmart also expects cost pressures will ease as it cuts jobs after hiring more workers during the COVID-19 pandemic. It’s also reducing its excess inventories. Even so, its earnings per share for fiscal 2023 will be flat compared with 2022, down from its earlier prediction of a 5% to 6% increase.

Based on its new forecast, the stock trades at 18.9 times the $6.46 a share the company will probably earn this year. That’s a reasonable multiple in light of its high market share and expanding online operations. Rising prices for food and other goods will also help Walmart draw more cost-conscious shoppers to its stores.

The company has raised the annual dividend rate each year for the past 49 years. Over the past five years, that payment has increased at an average annual rate of 1.8%. The stock holds a Highest TSI Dividend Sustainability Rating.

Recommendation in Dividend Advisor: Walmart Inc. is a buy.

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