Walmart (WMT:NYE) is the world’s largest retailer, with operations in 24 countries and regions. The company offers a variety of products and services through its retail stores, e-commerce platforms, and membership clubs. The company also operates in segments such as grocery, health and wellness, entertainment, and financial services.
Q1 Earnings Analysis:
Walmart reported its first quarter fiscal 2024 results on May 18, surpassing analysts’ expectations on both revenue and earnings. The company posted revenue of $152.3 billion, up 7.6% year-over-year (YOY), and above the consensus estimate of $147.9 billion. The company’s earnings per share (EPS) came in at $1.47, up 43% YOY, and above the consensus estimate of $1.31.
The company’s revenue growth was driven by strong performance across its segments and regions, especially in the U.S., where comparable sales increased 7.4% YOY. The company also benefited from a 30% YOY increase in its global advertising business, which leverages its customer data and insights to offer targeted ads and promotions.
The company’s earnings growth was mainly due to higher operating income, lower interest expense, and a lower effective tax rate. The company’s operating income increased 32% YOY to $6.9 billion, while its interest expense decreased 20% YOY to $522 million. The company’s effective tax rate was 20.5%, compared to 23.6% in the same quarter last year.
Walmart Stock-Q2 Earnings Guidance:
The company also raised its guidance for the second quarter and the full year fiscal 2024. The company expects revenue to grow 4% YOY for the second quarter, excluding currency fluctuations. The company expects EPS to be in the range of $1.63 to $1.68 for the second quarter.
The company expects revenue to grow 3.5% YOY for the full year fiscal 2024, excluding currency fluctuations. The company expects EPS to be in the range of $6.10 to $6.20 for the full year fiscal 2024.
The company also announced an ambitious plan to install electric vehicle (EV) charging stations at its locations across the U.S., in partnership with Electrify America. The company aims to have more than 2,000 EV chargers at more than 600 sites by the end of fiscal 2024.
Is Walmart Stock a Buy or Sell?
Walmart stock has gained about 12% in the past year, slightly underperforming the S&P 500 index, which has gained about 16%. However, the stock has gained about 8% year-to-date, slightly outperforming the S&P 500 index, which has gained about 10%.
WMT stock also trades at a forward P/E ratio of 23.8, which is above its five-year average of 21.8 and the industry average of 21.4. Walmart stock has a strong buy consensus rating among analysts, based on 17 buys and six holds. The average price target of $165.64 implies a potential upside of about 19% from the current price of $139.15 as of May 18.
Strengths:
The main strengths of Walmart are its diversified product portfolio, its global customer base, its e-commerce and digital capabilities, and its solid financial performance. The company also benefits from favorable industry trends, such as the increasing demand for essential goods and services, the growing adoption of online shopping and delivery, and supportive government stimulus measures.
Risks:
The main risks for Walmart are the competitive pressure from other retailers, especially online players such as Amazon (AMZN:NSD), the potential impact of the COVID-19 pandemic on its operations and supply chain, the volatility in currency exchange rates and commodity prices, and the regulatory and environmental uncertainties in different markets.
Conclusion:
Based on the above factors, Walmart stock may be a buy for long-term investors who are looking for exposure to the retail sector. The company has a proven track record of revenue and earnings growth, a reasonable valuation, a positive outlook for its core segments, and a strong buy rating from analysts.
